Venezuela Default a Sideshow as Bond Investors Hold Out Hope

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Venezuela and its state oil company are now officially in default. It changes nothing for bondholders, Bloomberg News reported. The declarations in the past 24 hours by S&P Global Ratings, Moody’s Investors Service and Fitch Ratings only confirmed what they already know -- PDVSA and the government are late on debt payments amid an unprecedented cash crunch and difficulties getting money through the chain of intermediaries. They’re well aware that holders of credit-default swaps are seeking to trigger payments on their insurance contracts, but that’s a $1.6 billion market that pales in comparison to the $60 billion of bonds that circulate among traders. What really matters to bondholders is that officials continue to say they’ll honor obligations and in fact seem to be making determined efforts to do so, with the government information minister affirming Tuesday that delayed sovereign payments were being made. Read more.