EL UNIVERSAL

Venezuela and Argentina next February 26th are launching the second joint debt bond issuance of the so-called Bond of the South for USD 1.5 billion, Venezuelan President Hugo Chávez said upon initialization of new trade and economic cooperation agreements with his Argentinean counterpart Néstor Kirchner in San Tomé, eastern Anzoátegui state of Venezuela.

According to the Venezuelan ruler, Venezuela and Argentina are issuing USD 750 million in bonds each.

In order to launch the joint debt issue, last February 16th the Venezuelan Government purchased USD 750 million in Argentinean Bonden 15, which will be resold in the issuance of the Bond of the South. According to Argentinean press reports, the Venezuelan Ministry of Finance has already paid Argentina for such Bonden 15 titles.

Venezuela is yet to disclose the instruments it is including in the new operation. Last week, the Executive Branch published in the Official Gazette the financial terms regarding issuance of debt bonds for up to USD 2.4 billion. Under such regulation, Chávez' Government may sell fixed interest titles (TIF) and covered interest and capital titles (TICC).

According to Chávez, minimum investment to purchase the Bond of the South will be USD 1,000 and the operation is open to "small investors, small savers, savings associations and cooperatives."

The Venezuelan President stressed that "this operation is a good example for other countries, as this is not dependent upon the international financial architecture, we are becoming independent." Further, he claimed the transaction amounts to democratization of public finances.

Last November, both countries made a joint issue of the Bond of the South for USD 1 billion. Venezuela sold USD 500 million in TICC and Argentina sold USD 500 million in Bonden 12 and Bonden 15.

In 18 months, Chávez' Government purchased USD 3.7 billion in Argentinean debt bonds, and subsequently sold USD 3 billion to domestic banks. According to Argentinean press reports, additionally to this new issue of the Bond of the South, the possibility that Venezuela continues buying Argentina debt titles has not been ruled out.

Bank of the South
In the framework of a bilateral cooperation agreement between Venezuela and Argentina, the memorandum of understanding for creation of the Bank of the South was reviewed Wednesday.

According to Chávez, "our goal is to transfer a part of international reserves to this bank. Countries (in the region) are depositing their reserves in banks up North, which must not continue."

Meanwhile, Kirchner stated that the financial institution is to fund investment projects in production and social areas. Chávez noted that the Great Gas Pipeline of the South could be funded by the intended Bank of the South.

The bank should be organized and its original capital should be defined within the next 120 days. So far, Argentina and Venezuela have joined this project and, according to Chávez, they are waiting for Brazil, Ecuador and Bolivia to make a decision in this regard.

Translated by Maryflor Suárez R.
msuarez@eluniversal.com