Venezuela

Millions of barrels of Venezuelan heavy crude, embargoed by the U.S., have been surreptitiously going to China, Bloomberg News reported. The cat-and-mouse games that avoid detection and sanctions include ship-to-ship transfers, shell companies and silenced satellite signals. But there’s another aspect to the dodge. It involves “doping” the oil with chemical additives and changing its name in the paperwork so it can be sold as a wholly different crude without a trace of its Venezuelan roots.

A federal judge ordered that Venezuela’s stake in oil refiner Citgo Petroleum Corp. be put up for sale to satisfy creditors, calling the country’s nonpayment an affront while acknowledging that no auction can occur under current U.S. sanctions, the Wall Street Journal reported. Judge Leonard Stark of the U.S. District Court in Wilmington, Del., said that Venezuela’s shares in Citgo’s parent company should be positioned for sale “to the extent possible.” No such sale can occur under rules promulgated by the Trump administration that restrict transfers of Venezuelan state property.

The European Union can no longer legally recognise Venezuelan opposition leader Juan Guaido as the country's legitimate head of state after he lost his position as head of parliament, the bloc's 27 governments said on Wednesday, Reuters reported. Guaido is still seen by the United States and Britain as Venezuela's rightful leader following the disputed 2018 re-election of President Nicolas Maduro, and two EU diplomats stressed the EU still did not recognise Maduro as president.

Venezuelan President Nicolas Maduro installed a new National Assembly filled with regime loyalists, consolidating his power over key institutions in the crisis-torn nation despite mounting U.S. sanctions, Bloomberg News reported. Lawmakers on Tuesday elected former Information Minister Jorge Rodriguez as the new president of the legislative body.

The government of Venezuelan President Nicolas Maduro is approaching some of the nation’s creditors in a bid to lay the groundwork for a debt deal should sanctions ease after next month’s U.S. election, Bloomberg News reported. His team has convened phone calls with local bondholders in the past few weeks, as well as those from Colombia, Argentina and Europe, according to people familiar with the matter. Prominent investors such as Boston-based Fidelity Investments; Goldman Sachs Group Inc. and BlackRock Inc.

Three small investment funds have started buying defaulted Venezuelan bonds as hopes of a change of government are fading and the South American nation is proposing a restructuring, according to sources and documents, Reuters reported. Canaima Capital Management, headquartered on the English Channel island of Guernsey, Uruguay-based Copernico and Cayman Islands-based Altana have bought heavily discounted bonds with face value of hundreds of millions of dollars, according to eight finance industry sources in Caracas, New York, Miami, Madrid and London.

A group of Venezuela creditors is launching a new fund focused on distressed debt. The Canaima Global Opportunities Fund, named after a Venezuelan national park, will focus on defaulted, U.S.-sanctioned notes from the South American country, said Celestino, Bloomberg News reported. Amore, the managing director of IlliquidX, a London-based distressed-debt brokerage firm that will advise the fund. Amore said they intend to reach out to Venezuelan authorities “immediately” to discuss an accord with bondholders.

Venezuela’s finance minister on Tuesday offered to speak with bondholders about a potential renegotiation of the cash-strapped country’s debt, which economists and financial industry sources said would face challenges due to U.S. sanctions, Reuters reported. The OPEC nation in 2017 suspended payments to holders of many bonds issued by the government, state oil company Petroleos de Venezuela and utility Electricidad de Caracas, and sought to initiate a restructuring process.

Venezuela’s bond market has been rocked over the past few years by defaults, sanctions and a collapse in crude oil prices, Bloomberg News reported. Yet the disastrous cocktail is attracting hedge funds including London’s Altana Wealth Ltd. that say the situation can’t get any worse. Altana is pitching the South American nation’s government notes, which can be bought at pennies on the dollar, as the “trade of the new decade,” according to two letters to investors seen by Bloomberg.