Correct as usual your Majesty. Board's gone the way of KRY stock - down the tubes.

Latin Americn Herald Tribune

Caracas, Friday, November 29,201

By Ezequiel Minaya & Kejal Vyas


CARACAS — The head of Venezuela’s central bank denied Thursday that the government had deals in place with U.S. banks that aimed to counter a shortage of hard currency in the import-dependent economy.

Central bank President Eudomar Tovar was responding to reports that Venezuela, which has grappled with a scarcity of basic goods, was considering using a portion of its vast gold reserves as backing for a loan from Goldman Sachs of around $1.6 billion.

Mr. Tovar also rebutted speculation that the left-leaning government was negotiating naming Bank of America as an intermediary to clear as much as $3 billion in backlogged payments to importers. Mr. Tovar, speaking at a news conference Thursday, downplayed the two possible transactions as “unofficial” proposals, though he didn’t clarify.

Though Venezuelans have scrambled to fill their shopping carts with common groceries like cooking oil, sugar and toilet paper, the government has maintained that it has enough dollars to keep imports flowing and has refused to publicly consider selling any gold.

Late leader Hugo Chávez crammed the vaults of the central bank with gold on the heels of soaring prices, placing a massive bet that his handpicked successor, President Nicolás Maduro, has stood behind even as prices for the precious metal have slipped, denting international reserves.

A gold swap deal would make sense since it would allow Venezuela to continue recording those gold holdings as international reserves even while using them as collateral for the loan, said Russ Dallen, a partner at Caracas Capital Markets.

A potential deal with banks could give the sign that Venezuela “is desperate for cash” after years of heavy government spending, Mr. Dallen warned. “For years, Venezuela has been writing checks that it can’t cash,” he added.

Mr. Tovar didn’t say whether negotiations had been held or are still under way. The central bank “doesn’t have any kind of operation” with the banks, he said.

Mr. Tovar also addressed concerns that Venezuela’s international reserves had fallen to as low as $20.7 billion in recent weeks, levels not seen in nearly a decade. He said the liquid portion of reserves, slated for day-to-day operations, was at normal levels.

On Wednesday, a central-bank official speaking anonymously because he wasn’t authorized to make public comments said the government was in talks with the banks. According to documents seen by The Wall Street Journal, Venezuela was considering using 1.45 million ounces of gold as collateral for a loan that would have cost some $800 million in interest. Bank of America, in its transaction, would have charged a 1.25% fee, the documents said. Mr. Tovar declined to respond to comments from the unnamed official. Bank of America and Goldman Sachs also declined to comment.

Strict capital controls in Venezuela restrict access to dollars to only government channels. Bottlenecks in the centralized system have kept greenbacks from importers, stirring shortages and inflation that has skyrocketed to a 12-month rate of nearly 55%.

President Maduro has attempted to turn around the economy, which posted anemic growth of 1.1% in the July through September period, by spreading price controls to more goods. Mr. Maduro, following the playbook of Mr. Chavez, has blamed economic woes on allegedly price-gouging businesses and has jailed dozens in connections with a nationwide crackdown. Mr. Maduro was elected into office after the death of Mr. Chavez in March from cancer.

Many analysts say, however, that during his 14 years in office Mr. Chavez sent public spending soaring while oil production sagged, straining Venezuela’s dollar supply.

Though experts have expressed concerned over Venezuela’s tumbling reserves, the oil-rich country keeps billions of dollars in a series of opaque off-budget funds, making it unclear exactly where Venezuela’s hard currency position stands.

The government maintains that it has more than enough dollars to keep the economy afloat once greedy shopkeepers and the currency black market are dealt with.

According to the World Gold Council, Venezuela has the most gold of any country in Latin America both by volume and percentage of overall international reserves. According to council data release this month, Venezuela holds 367.6 metric tons of gold, which makes up just under 70% of reserves.

Mexico is a distant second in the region with 123.5 metric tons of the precious metal, according to the World Gold Council.

Venezuela’s sinking reserves can be explained in part by the fall of gold prices, which have approached lows for the year this month. In a research note, UBS placed its one-month gold price target at $1,180 an ounce and its three-month target at $1,100 an ounce. WSJ DJ

Kitco News Monday November 25, 2013 3:33 PM

On Wednesday, markets were surprised following reports that the Venezuelan government entered into a gold swap agreement with Goldman Sachs. Under the potential agreement the government would put up 1.4 million ounces of gold to secure a loan worth 90% of the value of the yellow metal. Analysts at CPM Group say the swap agreement shouldn’t impact markets, but the deal was interesting because of how much gold is involved in the transaction. The research firm says the terms of the agreement “is a sign of desperation on the part of the government and a stunning reversal of ‘triumphant’ repatriation of its gold it staged in 2011 and early 2012.” The analysts add “the Venezuelan government has systematically destroyed the economy with wrong-headed policies.” CPM group points out that inflation is running around 48% - 50% and the country’s economic growth has almost been halted, bouncing around 0.5% - 2.6%, down from around 10% per annum growth rates prior to 2007.

By Neils Christensen of Kitco News; nchristensen@kitco.com

Caracas, Friday, October 18,2013

MEXICO CITY – Standard & Poor’s Ratings Services affirmed its ‘B’ foreign and local currency corporate credit ratings on Petroleos de Venezuela S.A. (PDVSA).

At the same time, the agency affirmed its ‘B’ senior unsecured debt rating on the company. The outlook remains negative. The affirmation follows S&P’s regular annual review.

In addition, the agency revised its stand-alone credit profile (SACP) on PDVSA to ‘b’ from ‘b+’.

“The downward revision of PDVSA’s SACP reflects the rising business risk for PDVSA in light of heavy government involvement in the energy sector which affects the company’s day-to-day operations amid increased country risk to which the company is exposed following Venezuela’s downgrade,” said Standard & Poor’s credit analyst Fabiola Ortiz.

S&P believes that PDVSA’s commitment to supply 450 million barrels per day (mbpd) to cover the government’s debt, coupled with a highly taxed industry, underscores the government’s heavy involvement in the sector. As a result, the agency believes that the company’s SACP is highly intertwined with the sovereign’s credit quality.

The ratings affirmation reflects S&P’s criteria on government-related entities (GREs) and its view of an “almost certain” likelihood of government extraordinary support to PDVSA under financial distress scenarios, as well as extraordinary financial burden under sovereign distress scenario.

This assessment is based on PDVSA’s “critical” role as it contributes about 50% of Venezuela’s revenues and 90% of its exports, and plays a key role in meeting the sovereign’s political and economic objectives and its “integral” link with the government, given its full and stable ownership of the company and high involvement in the day-to-day operations.

Caracas, Saturday, October 5,2013

Venezuela's Ministry of Energy and Petroleum reports that the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending October 4 fell to $98.99 a barrel

CARACAS -- Venezuela's weekly oil basket stayed below the country's desired $100 a barrel floor as easing worries over Syria and the Middle East and a US budget shutdown reduced demand for oil.

According to figures released by the Venezuela Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending October 4 was $98.99, down 40 cents from the previous week's $99.39.

WTI in New York averaged $102.93 -- down 50 cents -- for the week, while Brent crude traded in London averaged $108.63 -- down 8 cents from the previous week.

According to Venezuelan government figures, the average price in 2013 for Venezuela's mix of heavy and medium crude is now $102.73. In 2012, Venezuela averaged $103.42, higher than 2011's $101.06, 2010's $72.43, and much higher than 2009’s average price of $57.01.

Benchmark WTI traded on the NYMEX averaged $94.23 for 2012 while Brent averaged $111.64 for the year. So far in 2013, WTI has averaged $98.04 while Brent has averaged $108.46. Prior to 2010, Brent had historically traded below WTI.

Venezuela's basket set its highest weekly average on July 18, 2008, when it hit $126.46 before economies around the world began crashing under the weight of expensive oil and crashing sub-prime debt.

The United States is the largest importer of Venezuela’s oil exports.

According to the US Department of Energy, the US imported 728,000 barrels a day from Venezuela in July and averaged about 731,000 barrels a day for the year through July. In 2012, US oil imports from Venezuela averaged 906,000 barrels a day.