LAHT reports that, in the first bond deal for any Chinese bank in Venezuela, Mysteriously, Venezuela Sells $5 Billion in Bonds to Itself
The embattled government of Nicolas Maduro sold $5 billion in new debt bonds to itself via a Chinese bank without the mandatory approval of the Venezuelan National Assembly, according to an opposition lawmaker and a financial website Monday.
“On December 29th the government of Maduro contracted in an illegal manner a loan with a Chinese bank for $5 billion,” lawmaker Jose Guerra tweeted Monday. Guerra also provided a link to Cbonds, a website that offers financial information. The post in Cbonds reads: “New bond issue: Venezuela has issued international bonds for USD 5 billion maturing in 2036 with a 6.5% coupon.”
The new bond also appeared in the Bloomberg bond trading system but a check of Euroclear, the most important bond clearing agent, came up with the response that the International Security Identification Number (ISIN) for the bond – USP97475AQ39 — was “either confidential or has not been found. It is therefore not available for inquiry.”
While CBonds says that the Issue manager is Haitong International Securities, Bloomberg lists Haitong Bank, S.A.
Haitong is the second largest firm in the Chinese securities industry by total and net assets. Haitong Bank, S.A. is the investment banking subsidiary based in Lisbon, Portugal, and has offices in Mexico City and Sao Paulo.
And the bonds apparently are “physical delivery,” i.e., you actually have to show up with your clipped coupon in hand – which reminds you of the bearer bonds Hans Gruber was trying to steal in 1988’s Die Hard.
But I digress.
Russ Dallen of the Venezuela Opportunity Fund explains that Haitong bought Portugal’s Banco Espirito after it went broke in 2014 (emphasis added),
“Venezuela and PDVSA were important clients of Espirito Santo — so important that Espirito Santo actually set up a local bolivar bank in Venezuela. So it is not a surprise that Venezuela turned to those same bankers for this deal,”
and, as for those old-fashioned bearer bonds,
“Most developed nations have done away with them,” says Dallen. “But they are a favorite of drug dealers, money launderers and others who seek anonymity as well as a way to move large amounts of cash internationally in just a briefcase.”
More on the shenanigans at the link.
