Venezuela

On Thursday Nicolás Maduro will be sworn in for a second term as president after his first term saw an exodus of Venezuelans escaping economic meltdown. The UN says more than 3m people have fled Venezuela since 2014, around 10 per cent of the population, while the IMF expects prices will rise a staggering 10m per cent in 2019, the Financial Times reported.

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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.
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A group of creditors has demanded payment on a $1.5 billion Venezuelan bond that is in default, their lawyer said yesterday, kicking off a long-awaited showdown between creditors and the crisis-wracked OPEC nation, Reuters reported. President Nicolas Maduro’s government and state-owned companies owe nearly $8 billion in unpaid interest and principal following this year’s default on bonds amid a hyperinflationary collapse of the country’s once-wealthy socialist economy.
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Venezuela is facing the possible unraveling of a pair of billion-dollar settlements aimed at protecting the cash-strapped country’s U.S.-based Citgo Petroleum Corp from seizure by creditors. A lawyer for Canadian mining company Crystallex International Corp said on Tuesday Venezuela had breached the $1.4 billion November agreement that resolved a long-running fight over an expropriated gold mine. Separately, Venezuela’s $1.3 billion settlement in October with Rusoro Mining of Vancouver, also over expropriated mining assets, has been upended by U.S.

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Cash-strapped Venezuela settled a $1.2 billion arbitration claim that will prevent a creditor from stripping away its crown jewel foreign asset, the U.S.-based Citgo Petroleum Corp refining business, according to Canadian court documents, Reuters reported. The deal with Crystallex International Corp suspends the Canadian mining company’s push for a court-ordered auction of control of Citgo as a way of collecting on an arbitration award against Venezuela that has grown to more than $1.4 billion with interest. Citgo is based in Houston, Texas.

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Preliminary figures compiled by Venezuela’s central bank indicate that the crisis-wracked nation’s economy contracted 16.6 percent in 2017, according to two people with direct knowledge of the estimates, Bloomberg News reported. For the first time since 2016, the bank is preparing a raft of macroeconomic indicators for the International Monetary Fund to avoid sanctions including a possible expulsion from the lender. Bank technicians began working extended shifts and weekends earlier this month to deliver new growth and inflation data and meet a strict Nov.

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Venezuela just forked over almost $1 billion to stay current on a bond backed by shares of its U.S. refiner Citgo, Bloomberg News reported. The question is why. Yes, the payment ensures that Venezuela’s state-run oil company PDVSA gets to hold onto Citgo Holding Inc. for now, but many analysts think it’s just a matter of time before it has to forfeit the company. "It is hard to visualize a scenario in which Venezuela does not sooner or later lose Citgo to one of its defaulted creditors," Francisco Rodriguez, chief economist at brokerage Torino Capital, wrote in a note on Monday.

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Venezuela’s state-run oil company is preparing to make a $949 million bond payment that’s due Oct. 29, according to a person with direct knowledge of the matter. Petroleos de Venezuela SA’s plan to make the coupon and partial principal repayment on the 2020 notes would mark a rare exception for Nicolas Maduro’s government, which has racked up nearly $7 billion in defaulted debt to investors, Bloomberg News reported. This bond is backed by a majority stake in Citgo Holding Inc., meaning a non-payment would allow bondholders to lay claim to the crown jewel of Venezuela’s U.S. assets.

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Cardboard box-maker Smurfit Kappa has decided to deconsolidate its troubled Venezuelan operations from its balance sheet, after losing control of the unit to the local government, which will result in the writedown of its €60 million of net assets, The Irish Times reported. The move comes a month after the Caracas government decided to seize Smurfit Kappa Carton de Venezuela (SKCV) for 90 days amid complaints about prices that the company was charging for its products in an alleged abuse of its dominant market position – at a time when the country is grappling with hyperinflation.
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