The public bond offering of Petróleos de Venezuela S.A. |
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Authors: | Urbi Garay Carlos A. Molina |
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Affiliation: | IESA, Ave IESA, San Bernardino, Caracas DF 1010, Venezuela |
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Abstract: | In April 2007, Petróleos de Venezuela S.A. (PDVSA) issued debt for USD 7.5 billion, the largest debt offering to date by a Latin American company. The conditions surrounding this issue, which was denominated and tradable in dollars, but payable in bolivars, were quite special, particularly when considering the strict foreign exchange control system put into place by the Venezuelan government in 2003. The fact that the bond issue attempted to fulfill the dual purpose of offering dollars to local companies and investors in the midst of prevailing exchange rate controls, while helping to finance PDVSA as a company, creates a unique dilemma that is ideal for class discussion. This teaching case provides the information necessary for estimating and proposing a price for PDVSA's bond offer. |
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Keywords: | Debt issuance Bond pricing Latin America Exchange rate controls |
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