Venezuela Bond Bull Says Sanctions May Keep Maduro Paying

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One of the largest holders of Venezuelan bonds says U.S. sanctions are giving Nicolas Maduro’s government greater incentive to pay its debts. The penalties imposed late last month restrict the country’s ability to restructure its obligations, meaning the president’s only option is to keep scraping up enough cash to keep current on overseas notes, Bloomberg News reported. Maduro will put off default as long as possible because it would be catastrophic for the oil industry and ultimately lead to a government collapse, according to Bent Lystbaek, who oversees $3.4 billion in emerging-market debt at Danske Capital. “The willingness to pay is extremely high and now they have further impetus to keep the boat afloat,” Lystbaek said from Lyngby, Denmark. "Default would be the death sentence of Maduro’s administration." Lystbaek isn’t alone in his thinking. While Venezuelan bond prices dropped in the days after sanctions were announced, they’ve since mostly recovered on the view that Maduro has tremendous incentive to keep investors happy if he wants to stay in office. Read more.