Venezuela Bondholders Are Gearing Up for Battle After Futile Year

For the better part of the past year, Venezuela’s debt market has been dead. The bonds are in default and there are no restructuring talks, almost no trading and little action from creditors beyond grumbling in private, Bloomberg News reported. But that appears about to change. In the past few weeks, one group of investors banded together to demand immediate payment on the notes they hold, another cohort hired a law firm to review their options and a separate creditor sued in U.S. federal court. Their impetus to act seems to stem from both fleeting patience and the realization that if they don’t move now, they may fall behind other creditors in the line to lay claim to Venezuelan assets. “Bondholders are gearing up for a fight,” said Francisco Rodriguez, the chief economist at Torino Capital in New York. “They had been pretty quiet on the expectation that either some type of restructuring negotiation would emerge or that a change of political regime would occur in Venezuela. It seems like bondholders have decided that they have nothing to gain from continuing to wait.” Venezuelan debt has been hovering around 25 cents on the dollar since President Nicolas Maduro announced in November 2017 that he was suspending payments and seeking talks with creditors. Those discussions never took place, due to U.S. sanctions that make doing business with the country difficult, and for the most part not much else was happening as the arrears piled up. Read more.
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