Venezuela bonds crash as political tensions escalate

Carlos Becerra | Bloomberg | Getty Images

National guard officers raise batons as anti-government student demonstrators stand in front of them during a protest against the Supreme Court's decision to seize the powers of the opposition-led Congress in Caracas, Venezuela, on Friday, March 31, 2017.

Bonds issued by the Venezuelan government crashed on Friday as political tensions escalated following the annulment of the country's legislature by its high court earlier this week, a move that ignited protests and international condemnation.

The price on Venezuela's benchmark $4 billion bond maturing in September 2027 with a 9.25 percent coupon fell by more than 3.5 cents to around 46.4 cents on the dollar, Thomson Reuters data showed.

Its yield, which moves in the opposite direction of price, shot up by 1.55 percentage points to nearly 23 percent, the highest since last August. It was the largest one-day rise in yield since October.

The country's high court late Wednesday stated it was assuming Congress' role in a ruling authorizing President Nicolas Maduroto create oil joint ventures without the previously mandated congressional approval.

The move was met with international condemnation and street protests, and on Friday the fallout intensified when Venezuela's attorney general broke ranks with Maduro and rebuked the judiciary for its move.

Some longer-dated bonds were even lower in price. The less widely traded March 2038s, with a 7 percent coupon, were bid at 40 cents on the dollar, down from 42.6 cents on Thursday. Their yield rose to 18.22 percent from 17.17 percent.


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