Hopefully we are not affected by the recent developments should Mr. Chavez over-react to the decision against him. I would like to think that this could work in our favor, but it depends on what his response will be.

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 By Walter Brandimarte Reuters - 2 hours 45 minutes ago

NEW YORK (Reuters) - Venezuela's sovereign bonds sold off on Thursday after court orders around the world froze about $12 billion (6.2 billion pounds) in assets belonging to state oil company PDVSA, the main source of government income.

The decisions, which favour Exxon Mobil Corp , come ahead of a multibillion-dollar arbitration case over Venezuela's nationalization of several oil projects last June. Assets owned by ConnocoPhillips were also seized at that time.

The news sparked concerns about possible retaliation by President Hugo Chavez against foreign investors and weighed on Venezuela's sovereign bonds.

The benchmark global bond due 2027 lost 2.375 points in price to be bid 98.938, while total returns offered by the country's debt slipped 1.52 percent according to the JP Morgan EMBI+ index.

"I'm concerned about what type of measures Venezuela could come up with to retaliate against the move," said Goldman Sachs' senior economist Alberto Ramos. "But I think the implication for debt sustainability or debt payment is minimum at this stage."

PDVSA's three maturities of dollar-denominated bonds were also hit by the news. The company could have its ability to operate "severely impaired" if other oil firms seek the same sort of court support, said Lehman Brothers' analyst Giangranco Bertozzi.

"If PDVSA was dealing with a liquidity problem before, this could exacerbate it markedly. And minimally, it may help to explain why the oil giant has been looking for cash in more unorthodox ways recently," Bertozzi wrote in a note to clients.

Indicative bid prices for PDVSA's bonds due 2017 fell as much as 2.750 points, while prices for the papers maturing in 2027 declined as much as 1.900 points. Bonds due in 2037 saw bid prices slipping 1.850 points.

Gunter Heiland, a portfolio manager with JP Morgan Asset Management in New York, said, however, there were no investors bidding for the bonds.

"The news looks negative, so the bids disappeared and the offers stayed," Heiland said.

(Editing by Leslie Adler)