CARACAS, (Reuters) – Venezuela’s widely traded global bonds inched down yesterday after President Hugo Chavez’s return from cancer surgery in Cuba, which has left some doubts about how effectively he can govern.
Appearing pale but defiant, Chavez saluted his people on Tuesday on their 200th anniversary of independence, but he did so from inside the presidential palace instead of personally attending the independence celebrations.
Markets had interpreted the socialist leader’s sickness as positive news for investors, hoping it meant a change to more business-friendly leadership in the OPEC nation. His return from Havana has curbed recent gains by its debt.
Wall Street is focused on rumors of a forthcoming cabinet reshuffle that could give clues as to who might be the ruling Socialist Party’s candidate at a presidential election due next year, in the event the 56-year-old Chavez decides not to run.
A cabinet reshuffle might suggest Chavez recognizes that his illness will limit his government role or crimp his energetic, hands-on style, RBS Emerging Markets Strategy said in a research note, but also indicated some paralysis or status quo on policy management.
“Perhaps the replacement of some key managers (namely the vice president) could show President Chavez wants to surround himself with closer confidantes that would better reflect his ideology and public image with the voters,” it said.
Following big gains last week after Chavez’s announcement that he had undergone an operation in Cuba to remove a cancerous tumor, the benchmark dollar-denominated 2027 global bond was down 0.625 point to bid at 74.750 yesterday with a 13.024 percent yield.
Its bond due in 2022, the third-most-traded single emerging market government debt, was flat to bid at 89.438 with a yield of 14.791 percent.
Ordinarily, Chavez would have attended Tuesday’s grand military parade marking the bicentennial of the end of Spanish colonial rule, which took months to prepare. Instead, he gave a brief address from inside his palace with military chiefs.