Venezuela may delay PDVSA bond issue -source

CARACAS, May 20 (Reuters) - Venezuelan state oil company PDVSA has yet to present a planned $2.5 billion bond issue to President Hugo Chavez and the operation is unlikely to happen this month, a company source told Reuters on Wednesday.

PDVSA had planned to issue the 2-year zero-coupon bond by the end of May to help pay off billions of dollars of debts built up with service companies since oil prices began falling last year.

"I don't think it will happen this month because there is no time and it still has not been presented to President Chavez, but it's still planned with the same conditions as originally," said the source, who has knowledge of the debt proposal but asked not to be identified.

This type of bond, denominated in dollars but payable in the local bolivar currency, is frequently used by the government to dampen black market currency exchange, where the bolivar is currently trading at three times the official rate of 2.15 to the dollar.

In April the same source said PDVSA planned to issue the bonds with an implicit rate of about 4.7 bolivars, which would give the company close to 12 billion bolivars.

The socialist government seized many oil service companies it owes money to earlier this month and has not yet said how it will compensate them. Under a new law, PDVSA has the option to pay for nationalized companies with bonds rather than cash. (Reporting by Ana Isabel Martinez; Writing by Frank Jack Daniel; Editing by Leslie Adler)