Venezuela sells $1.5 billion in second hybrid bonds issue

Venezuela sold $1.5 billion of mixed dollar- and bolivar-denominated bonds, its second issue this month, as it continued a program to refinance its public debt, the Finance Ministry said on Thursday.
Domestic demand for the issue, priced at 106 percent of face value and packaged in so-called "investment units", far outstripped the original minimum offer of $375 million. The units combine six-month dollar notes with bolivar bonds maturing in 2009 and 2010.
"The Ministry received bids for a total of 1.6 million investment units... equivalent to 4.8 trillion bolivars ($2.5 billion)," the Ministry said in a statement.
The hybrid bonds, which were first sold earlier this month, have whetted the appetite of local investors seeking access to hard currency under Venezuela's stringent foreign exchange controls in place for more than a year.
Each of the investment units has a nominal value of $1,500 with one third in US currency and two thirds in local bolivar bonds.
Finance Minister Tobias Nobrega had initially said late on Wednesday the government would sell up to $1.2 billion in the latest offer of the mixed notes. But the Ministry's Director of Public Credit, Alejandro Dopazo, told Reuters on Thursday that the difference up to the $1.5 billion sold was covered by a previous debt authorisation from the National Assembly.
The world's No. 5 oil exporter plans to use the funds from the issue to finance a repurchase of part of the $4.2 billion in domestic public debt maturing between April this year and the end of next year.
Two weeks ago, Venezuela sold $1.5 billion of the same hybrid dollar and bolivar instruments at a price of 109 percent of face value, giving the government an effective $1.635 billion in cash.
Dopazo said the second sale would make available an additional $1.606 billion and these combined funds were being used to repurchase most of the domestic debt falling due in 2004 and 2005, and to buy back foreign debt.
The government recently bought back $741.5 million of its domestic 2004 debt using the proceeds of the first hybrid bond sale and it said on Thursday it would repurchase debt due this year and next with funds from both sales up to now.
Venezuela started refinancing its domestic debt in November 2002 with a series of bond swaps and in August of last year began a foreign debt refinancing by repurchasing $1.5 billion of its maturing Brady bonds.
The government has sold around $6 billion in fresh foreign debt since the Brady bond repurchase.