(In Spanish here)
So, today President Hugo Chavez proudly
announced that once again Venezuela will buy Argentinean bonds to sell to
Venezuelans as a way of reducing local monetary liquidity. This time it will
be to the tune of US$ 750 million.
This operation is simply indefensible,
there is no justification for Venezuela acting as a bridge for Argentina,
just because that country acted irresponsibly when it defaulted in its debt.
This is simply a subisidy for that country b the Venezuelan people.
Moreover, other than political, there is no benefit for Vemezuela or its
citizens by doing this. In fact, if the whole Bono del Sur issue announced
by Chavez of it were to have all Venezuelan components, would decrease costs
for the country in the future in its debt service.
The Government could, for
example, issue the same US$ 750 million as a new Venezuelan bond with lower
coupon and use the proceeds for the sale to buy outstanding bonds of the
Republic which are more expensive. But clearly no such luck, the goals of
the autocrat/dictator are more important than the future of the Venezuelan
people who are once again cheated of what rightfully belongs to them. A
poorer country subsidizing a richer one, only this stupid revolution could
even think of that. Argentina's GDP per capita is almost triple that of
Venezuela, as simple as that.
The most laughable part of the issue is to say they will give priority to "small investors". I know nobody who would be interested in an Argentinean US dollar denominated Sovereign bond and a Bs. denominated bond (TICC) indexed to the US$ that yields 5%, which is what the Venezuelan part is all about. Only banks can be interested in the latter. Most "small investors" simply view this as a cheaper way of investing in greenbacks, they buy the Bono del Sur, sell the Argentinean bond in exchange for US dollars and sell the TICC at a profit. In the end they bought dollars at a cheaper rate and take the money to their account abroad. There are also speculators, they buy the bond sell the parts, including the dollars in the parallel market and make a tidy profit.
Yeap, it is all definitely very revolutionary, what a disgrace!
10:16:20 PM 
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