Although a curious silence surrounds this news, it turns out that there is still no definite agreement with Venezuela. Investment bank Goldman Sachs’ purchase of the Dominican debt owed to Venezuela appears to be part of a triangle whose third vertex is the Dominican Republic.
According to The Wall Street Journal, Venezuelan officials have spoken to Dominican officials and to the Goldman Sachs Group, with a view to implementing a financial formula that will bring some relief to Venezuela’s “fragile finances.”
According to reports in the US media, which just identifies as the source “people familiar with the matter,” Goldman Sachs will take over the debt that the Dominican Republic owes to Venezuela, at a great discount, in order to then sell it to the Dominican Republic, which would pay for it with the funds that it would obtain by issuing more sovereign bonds.
Nevertheless, in contrast with the report in El Nuevo Herald on Monday 1 December 2014, the source at the WSJ said that the parties “have not yet reached an agreement,” so that it “was not imminent.”
While these versions were circulating in US newspapers, the authorities in the Dominican Republic have remained silent. On Tuesday 2 December, after Diario Libre requested a statement from Minister of Hacienda Simon Lizardo, a request it reiterated on Wednesday 3 December, the only known reaction from the official is that “he has not been informed.”
The Venezuelan Embassy in the Dominican Republic is also keeping quiet, as it did not answer Diario Libre’s request for clarification either.
On Monday evening, El Nuevo Herald reported that the Nicolas Maduro government had sold the Dominican debt from Petrocaribe (some US$4.3 billion, as of October 2014) for which the investment bank would pay 41% of the total amount. On Wednesday 4 December, UK newspaper The Financial Times (FT) also reported on this issue, in a blog by John Paul Rathbone and Andres Schipani, where it is estimated that the coupon of US$1.7 million that Goldman Sachs would obtain will be at an interest rate of 11%.
The Financial Times analysts mentioned a report by the Bank of America, where it is calculated what the fall in oil prices means for Venezuela which has to find US$25 billion per year in fresh foreign financing in order to maintain its own imports.
On Friday, 28 November the price of Venezuelan oil fell 7%, reaching US$63.40 a barrel, which is far below the US$100 that the government of Nicolas Maduro considers the “fair price.”
Oil exports represent 96% of Venezuela’s income. The abrupt fall in the prices of crude oil has immersed the country in a “worsening economic crisis.” Venezuela’s fiscal deficit is around 17%, and it is expected that its economy will contract by 3% this year with an inflation rate going over 60%.
http://online.wsj.com/articles/venezuela-cuts-spending-as-oil-prices-plummet-1417554366
http://www.elnuevoherald.com/noticias/mundo/america-latina/venezuela-es/article4232939.html
http://dr1.com/forums/living/147375-venezuela-sells-petrocaribe-dr-debt.html
http://www.argusmedia.com/News/Article?id=957160