Venezuela’s government issued $5 billion in bonds to state-run bank Banco de Venezuela, in a move to help the nation’s floundering economy.
The bank purchased the dollar-backed currency notes at the substantially subsidized rate of 10 Venezuelan bolivars per U.S. dollar, Reuters reports. The bonds reach maturation in 2036.
The Venezuelan economy is in desperate need of hard currency to help increase food and medical imports. The government put its own military in charge of the country’s food supplies, and Venezuelans are dying of treatable illnesses due to shortages of medical supplies. One out of three Venezuelans who were admitted to public hospitals died in 2015. (RELATED: 1 In 3 Patients Admitted Admitted To Venezuelan Hospitals Die)
Inflation is so bad that the government ordered millions of pounds of its currency to be dropped by plane-load across the nation. The inflation rate in Venezuela hit triple digit percentages in 2016, and is expected to go as high as 1,600 percent by this year.
Venezuelan President Nicolas Maduro has had little luck finding lending opportunities abroad, as investors are concerned the nation will default on loans due to its weak economy.
The $5 billion deal is underwritten by China’s Haitong Securities, and it marks Venezuela’s first sovereign debt issue since 2011, according to Reuters. As part of the conditions of the deal, Banco de Venezuela can sell notes on the international marketplace, but because of the heavy discount rate on the deal the entire sum would fetch just $2 billion.
On the Venezuelan black market, dollars go for as much as 3,200 bolivars.
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