Venezuela to Offer Bonds Again After Sale Flops Today

Venezuela plans to sell 200 billion bolivars ($93 million) of six-year bonds to local investors tomorrow after canceling a sale of the same securities today.

The bonds, which mature in November 2013, will pay an annual interest rate of 9.625 percent, the central bank said. Bond traders said the government refused today to pay the yields investors demanded on the securities. Public Credit Director Luis Davila, who manages the government's debt sales, wasn't immediately available for comment.

The sale flop comes just a week after Venezuela re-initiated local debt auctions to help raise cash to pay back maturing debt. The government sold bonds due in December 2012 last week to yield 9.16 percent. Accelerating inflation in the South American country is making investors balk at yields below 10 percent.

``The banks are telling the government: `We need something better than 9 percent,''' said Alejandro Gonzalez, a bond trader with brokerage Solfin Sociedad de Corretaje de Valores in Caracas. ``With inflation at 17 percent, 9 percent doesn't cut it.''

President Hugo Chavez has used a surge in oil income to boost government spending, fueling a surge in consumption that drove the annual inflation rate to 17.2 percent last month from 13.5 percent a year earlier.

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