Archive for July 1st, 2009

Petrobono or Petrobrainless?

July 1, 2009

For two months the Government was “thinking” about issuing a bond for PDVSA. Last week it finally announced it, but:

1) It was too large an issue

2) It was only aimed at corporations

3) It was not registered abroad

4) It was forbidden to be traded in US$

5) The scheduled seemed to ignore i) Monday was a banking holiday, Friday was a stock market holiday in Wall St.


i) First the Government decided to let individuals participate

ii) Then it changed the schedule

iii) Then it allowed it to be traded in US$

iv) Finally, yesterday it said it would register in the international markets.


–It is issued under Venezuelan Law, not under international regulations (PDVSA bonds were issued in 2007 under Reg S), international investors will not be as interested.

–Friday is still a holiday in the US and Thursday is half a holiday for fixed income markets.

–It is still too large at US$3 billion.

Thus, the bond remains a strange animal and will yield more than already existing PDVSA bonds. I will create indigestion in international markets as Venezuelans sell it abroad.

My suggestion:

Ask your broker to give you a price such that:

1) The bond yields more than 22%

2) You are buying dollars at or below Bs. 6 per US$

Better yet, do nothing, but next Monday or Tuesday buy the bond in US$ in the international markets as it gives you a yield (Yield to Maturity) of over 22% per yea for the next two years.

Issuing these bonds should be simple, the people managing it are simply brainless, so we go from Petrobono to Petrobrainless.

That is what the robolutionary PDVSA is all about.

As two mores scientific papers show anomalies on the RR, the WSJ picks up the subject

July 1, 2009

This month, the journal Statistical Science accepted two more papers that provide scientific evidence that all was not well with the 2004 Recall Referendum that took place in Venezuela. This provides further evidence of widespread manipulation of the votes in the referendum and constitutes the third and fourth scientific papers accepted for publication. Curiously, none of the papers purporting to show that the vote was clean or that these papers constituted no proof has ever been accepted for publication in a peer reviewed journal.

I have already talked about the paper by Delfino and Salas, which was earlier accepted for publication and there is a second paper by Maria Febres Cordero and Bernardo Marquez, also published in the same journal.

The first paper accepted is one I have discussed already by Raquel Prado and Bruno Sanso, which deals with the mathematical discrepancies between exit polls and the results reported by the Electoral Board. What is perhaps most intriguing about this study is that there are two polls showing the same anomalies.

The second paper accepted for publication is by Pericchi and Torres and I have also reported on this, but the accepted paper goes further than the report I presented. They apply Benford’s Law for both the first and second digit to the 2004 USA Presidential elections, three (1996,200 and 2004) Puerto Rican elections the 2000 Venezuelan Presidential election and the 2004  recall vote. They fond that the second digit law is compellingly rejected ONLY in the case of the Venezuelan recall vote and ONLY for the votes from the electronic voting machines. In fact, their results show an excellent fit to, for example, the 2004 USA Presidential elections, as well as the manual votes in the Venezuelan recall vote.

All of these topics have become quite relevant today due to the controversial results of the Iranian elections. In fact, today the Wall Street Journal publishes an article on the subject quoting Prof. Mebane who used similar techniques to show that the second digit Benford Law suggests that there was ballot stuffing in Iran. The article even quotes early detractors of the use of these techniques changing sides given the evidence of all these studies. The Carter Center criticized the use of Benford’s Law as it “could” under certain conditions suggest fraud in fair elections.

These new results invalidate the conclusions of the Carter Center, but by now they have moved on to talk about democracy (don’t laugh) in Honduras and none of their “work” on the elections has ever been accepted for publication.This seems to be a new form of judgemental imperialism by foreign politicians that have no clue about what they are talking about, but keep interfering with the affairs of our countries.

Note added: And the WSJ seems to have picked up on Benford