Post by ukipa on Jul 28, 2011 17:57:14 GMT 4
What the Show’s Going to Cost
From the Editors of VenEconomy
Yesterday, the Central Bank of Venezuela published an invitation to bid on the Amortizable Sovereign Bond 2031 with a nominal value of $4.2 billion, maturity on August 5, 2031, and a coupon of 11.95% payable six-monthly.
The offer opens today, Wednesday, July 27, and closes next Friday. The minimum purchase is for $3,000 at an exchange rate of Bs.F.4.30:$.
Reports have it that 40% of the offer has been earmarked for the domestic productive sector and that the remaining 60% ($2.5 billion) will be available to private individuals or companies not included in that category. The list of individuals and companies who have been awarded the bonds will be published on August 1.
Supposedly, the purpose of the issue is to finance servicing of the public debt, the Great Venezuela Housing Mission, and the Great Venezuela Agro Mission. What is really behind these purported objectives, however, is the need to supply the economy with the dollars it requires to function and to provide the market with new instruments with which to keep SITME going, particularly now that August is here, a time when importers need foreign currency to stock up for the Christmas season.
The government will have more money available with which to increase – via the missions mentioned above and other mechanisms – fiscal spending and so try to jumpstart the economy, with an eye to the elections first and foremost.
There is absolutely no justification for this fresh borrowing, much less so when the government has an average oil barrel price this year of $98.77, 37% higher than in 2010.
Besides tying up the country’s future revenues in order to be able to meet debt capital repayments and interest payments, it will mean exacerbating inflationary pressures in the economy. When the government releases these bolivars into the economy via public spending, they will generate an increase in the demand for goods, and this, in an economy that is producing less daily, will result in higher inflation and more acute shortages.
But as far as this government is concerned, all is fair in love and politics in the run-up to elections.
The future is looking increasingly bleak: inflation in Venezuela since February 2003, when the controls were first implemented, comes to 458%; and with this new debt and the enforcement of a Costs and Fair Prices Act, that trend will be impossible to reverse.
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For more information about VBonds and availability to investors in the secondary market, contact: theprivateinvestors@hushmail.com
From the Editors of VenEconomy
Yesterday, the Central Bank of Venezuela published an invitation to bid on the Amortizable Sovereign Bond 2031 with a nominal value of $4.2 billion, maturity on August 5, 2031, and a coupon of 11.95% payable six-monthly.
The offer opens today, Wednesday, July 27, and closes next Friday. The minimum purchase is for $3,000 at an exchange rate of Bs.F.4.30:$.
Reports have it that 40% of the offer has been earmarked for the domestic productive sector and that the remaining 60% ($2.5 billion) will be available to private individuals or companies not included in that category. The list of individuals and companies who have been awarded the bonds will be published on August 1.
Supposedly, the purpose of the issue is to finance servicing of the public debt, the Great Venezuela Housing Mission, and the Great Venezuela Agro Mission. What is really behind these purported objectives, however, is the need to supply the economy with the dollars it requires to function and to provide the market with new instruments with which to keep SITME going, particularly now that August is here, a time when importers need foreign currency to stock up for the Christmas season.
The government will have more money available with which to increase – via the missions mentioned above and other mechanisms – fiscal spending and so try to jumpstart the economy, with an eye to the elections first and foremost.
There is absolutely no justification for this fresh borrowing, much less so when the government has an average oil barrel price this year of $98.77, 37% higher than in 2010.
Besides tying up the country’s future revenues in order to be able to meet debt capital repayments and interest payments, it will mean exacerbating inflationary pressures in the economy. When the government releases these bolivars into the economy via public spending, they will generate an increase in the demand for goods, and this, in an economy that is producing less daily, will result in higher inflation and more acute shortages.
But as far as this government is concerned, all is fair in love and politics in the run-up to elections.
The future is looking increasingly bleak: inflation in Venezuela since February 2003, when the controls were first implemented, comes to 458%; and with this new debt and the enforcement of a Costs and Fair Prices Act, that trend will be impossible to reverse.
--------------
For more information about VBonds and availability to investors in the secondary market, contact: theprivateinvestors@hushmail.com
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