Venezuela's global bonds firmed by nearly 1 percent on Monday, on the first business trading day following the Friday night announcement of the country's first devaluation of its currency since 2005. Returns for globally traded bonds rose 0.94 percent, according to the benchmark J.P. Morgan's Emerging Markets Bond Index Plus.
The increase in the returns was the highest posted by any of the 15 emerging market nations, which comprise the EMBI+ index. Returns reflect the price of a bond and gains from interest payments. Venezuela's global bonds yield spreads over US Treasuries narrowed by 25 basis points to 873 basis points. A narrowing of the yield spread over US Treasuries means investors are pricing an investment as relatively less risky, although it can often be a reflection of broader global moves rather than just local factors.
The bolivar had been fixed at 2.15 to the dollar since 2005 as part of President Hugo Chavez's strict controls of Venezuela's economy under his "21st century socialism" policies. But Chavez, in a live address on state TV, said the bolivar would now have two levels - a preferential rate of 2.6 per dollar for essential imports like food, health and machinery and a 4.3 "petro-dollar" rate for other things.