FT on the debt buyback

July 21, 2003

 


The Financial Times has an article on Venezuela today, about the debt repurchase.


 


In the Financial Times Andy Webb talks about the debt buyback. I particularly liked the subtle way in which he suggests that there may have been something improper in the sale by a Government bank of precisely the same debt instruments that are being repurchased now (front running in financial terms):


 


About $411m worth of the type of bonds targeted in the repurchase, DCBs and Flirbs, were bought in March and April through two privately owned brokerages – New York-based Global Partners Group, which used a credit line from Lehman Brothers, and Multiplicas, a local broker tied to Venezuelan bank Banesco.


The bonds were sold by Venezuelan state development bank Bandes in exchange for promissory notes issued by the ministry.


Bond prices were at a heavy discount earlier this year, and their holders stand to make a sizeable gain if tendered in the buy- back.

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