Why Is Venezuela Avoiding The SEC?
Venezuela's state-owned oil company, Petroleos de Venezuela SA, is buying back $83 million in debt. Why? Because that debt is registered with the SEC. And in order to avoid having to disclose additional information about its operations, the company is buying back the debt.
The SEC has strict requirements for disclosure. As the AP explains, "The SEC filings disclose to investors key details about how the company operates, such as income from exports, refining, production and reserves."
The disclosures require the release of very sensitive information, especially for a company that was recently nationalized (with all dissent purged via mass firings) and that is the lynchpin for Chavez's petrodollar fueled anti-American Bolivarian revolution. Obviously, there is a strong incentive to avoid disclosing as much information as possible about the company. This is explicitly recognized by Venezuelan officials:
"We have no reason to be registered with the SEC if we're not going to have debts" registered with the agency, [PDVSA's finance director] [Eudomario] Carruyo said.
Oil Minister Rafael Ramirez has said previously that PDVSA would pay off its debt traded in U.S. markets, calling it "unacceptable" for a Venezuelan state company to have to report to foreign countries.
The company is not buying back all of its debt. In fact, the great majority of it is owned by nations other than the U.S. Carruyo says that the total outstanding foreign debt is $3.33 billion, or far more than the $83 million that is being bought back. But the rest of that debt is not registered in a regulatory environment as transparent as the SEC's. Therefore, disclosure requirements are far less stringent.
There many reasons why the PDVSA would want to avoid disclosing information about its operations. As I have noted on multiple occasions, the company is forging alliances with other state-owned oil companies outside of this hemisphere: in Iran, Russia, and China, in particular. The goal is to lessen Venezuela's dependence on exports to the U.S., which would make it far easier for Chavez & Co. to proceed with their anti-American interests.
Obviously, the PDVSA and Chavez would like to avoid disclosing the precise details of these dealings as much as possible. Thus, the PDVSA will not have any more debt in the U.S.
The SEC has strict requirements for disclosure. As the AP explains, "The SEC filings disclose to investors key details about how the company operates, such as income from exports, refining, production and reserves."
The disclosures require the release of very sensitive information, especially for a company that was recently nationalized (with all dissent purged via mass firings) and that is the lynchpin for Chavez's petrodollar fueled anti-American Bolivarian revolution. Obviously, there is a strong incentive to avoid disclosing as much information as possible about the company. This is explicitly recognized by Venezuelan officials:
"We have no reason to be registered with the SEC if we're not going to have debts" registered with the agency, [PDVSA's finance director] [Eudomario] Carruyo said.
Oil Minister Rafael Ramirez has said previously that PDVSA would pay off its debt traded in U.S. markets, calling it "unacceptable" for a Venezuelan state company to have to report to foreign countries.
The company is not buying back all of its debt. In fact, the great majority of it is owned by nations other than the U.S. Carruyo says that the total outstanding foreign debt is $3.33 billion, or far more than the $83 million that is being bought back. But the rest of that debt is not registered in a regulatory environment as transparent as the SEC's. Therefore, disclosure requirements are far less stringent.
There many reasons why the PDVSA would want to avoid disclosing information about its operations. As I have noted on multiple occasions, the company is forging alliances with other state-owned oil companies outside of this hemisphere: in Iran, Russia, and China, in particular. The goal is to lessen Venezuela's dependence on exports to the U.S., which would make it far easier for Chavez & Co. to proceed with their anti-American interests.
Obviously, the PDVSA and Chavez would like to avoid disclosing the precise details of these dealings as much as possible. Thus, the PDVSA will not have any more debt in the U.S.
posted by Thomas Joscelyn at 5:27 PM
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