Wires

UPDATE 1-U.S. Treasury temporarily blocks creditor seizure of refiner Citgo

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CARACAS, Oct 24 (Reuters) - The U.S. government on Thursday temporarily blocked the sale of shares in refiner Citgo Petroleum Corp that are linked to a bond issued by its parent, Venezuelan state oil company PDVSA, staving off creditor seizure of the refiner just days ahead of an expected bond default.

The PDVSA 2020 bond, which is backed by 50.1% of Citgo shares, is seen going into default next week when a $913 million payment comes due because the cash-strapped company lacks the funds to pay.

The U.S. Treasury said the sale and transfer of such shares would be blocked until Jan. 22 unless specifically authorized by the Office of Foreign Asset Control. The move comes as Petróleos de Venezuela, S.A., known as PDVSA, has been squeezed by a broad U.S. sanctions program against the government of President Nicolas Maduro.

That means bondholders for the next three months will be unable exercise their right to seize shares of the refiner that were pledged as collateral on the bond, even if the bond goes into default.

Renegotiating bond payments could require additional licenses, the Treasury said on its website.

Such licenses provide exemptions to the sanctions, which broadly prohibit American citizens and companies from interactions with Venezuelan government officials.

The announcement represents a victory for Venezuelan opposition leader Juan Guaido, who has been recognized by the United States and some 50 countries as the legitimate leader of the South American nation.

Guaido has repeatedly asked Washington to step in with measures to prevent creditors from seizing Citgo. U.S. lawmakers including senators Marco Rubio and Ted Cruz last week made a similar request. (Reporting by Caracas newsroom Editing by Chris Reese and Richard Chang)