Venezuela

Loans to Venezuela from President Nicolas Maduro’s allies Russia and China would be renegotiated though the Paris Club if Maduro leaves power, an advisor to the opposition said on Wednesday, responding to concerns about favourable treatment for the two countries, Reuters reported. Ricardo Hausmann, who represents opposition leader Juan Guaido at the Inter-American Development Bank (IADB), said Guaido’s team has not determined how loans might be restructured under its governance because bilateral debt talks typically take place under the auspices of the Paris Club creditor group.

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Who Can Pay Venezuela’s Debts?

Venezuela, and its state-owned oil company Petróleos de Venezuela SA, have stopped making payments on a lot of their debts. Many of these debts are in the form of bonds governed by New York law, and so bondholders have sued Venezuela in U.S. courts asking for their money back, a Bloomberg View reported. This is not, in sovereign debt cases, a foolproof approach: The court can tell Venezuela to give them their money back, but it can’t make Venezuela do it; Venezuela is its own country and doesn’t have to listen to U.S. courts.

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Creditors holding Venezuelan debt on Tuesday pushed back on debt restructuring plans backed by opposition leader Juan Guaido, urging a “fair and effective” framework for talks and improved communications with investors holding defaulted bonds, Bloomberg News reported. Creditors holding Venezuelan debt on Tuesday pushed back on debt restructuring plans backed by opposition leader Juan Guaido, urging a “fair and effective” framework for talks and improved communications with investors holding defaulted bonds.

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Venezuela’s opposition plans to treat equally creditors ensnared in the country’s $150bn web of defaulted debt if President Nicolás Maduro is removed — after weeding out inflated, fraudulent, or corrupt claims, the Financial Times reported. In a new policy paper, advisers to US-backed opposition leader Juan Guaidó sketch out how his administration would go about restructuring Venezuela’s huge and varied stock of debt, which includes unpaid supplier invoices, expropriation claims and defaulted bonds, among other instruments.

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Venezuela has defaulted on a gold swap agreement valued at $750 million with Deutsche Bank AG, prompting the lender to take control of the precious metal used as collateral and close out the contract, according to two people with direct knowledge of the matter, Bloomberg News reported. As part of a financing agreement signed in 2016, Venezuela received a cash loan from Deutsche Bank and put up 20 tons of gold as collateral.

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Venezuela’s opposition has hired veteran debt lawyer Lee Buchheit to help restructure the country’s more than $150 billion debt burden, suggesting it could take a tough approach to dealing with investors holding defaulted bonds, Reuters reported. Buchheit, a former Cleary Gottlieb attorney who has represented several governments in debt talks with bond investors, published an academic article last year suggesting ways for a future Venezuela government to minimize debt repayments.

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The economic team of Venezuelan opposition leader Juan Guaido is pushing to ensure a $71 million interest payment is made on the nation’s last remaining bond not in default, Bloomberg News reported. On Wednesday, the opposition-controlled National Assembly’s finance commission approved a measure to vote next Tuesday on the disbursement to holders of state oil producer PDVSA’s notes due in 2020. The group of lawmakers recommended Congress support the payment. That’s because the bond is backed by a majority stake in Citgo, the Venezuelan-owned U.S.

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President Nicolas Maduro is funneling cashflow from Venezuelan oil sales through Russian state energy giant Rosneft as he seeks to evade U.S. sanctions designed to oust him from power, according to sources and documents reviewed by Reuters. The sales are the latest sign of the growing dependence of Venezuela’s cash-strapped government on Russia as the United States tightens a financial noose around Maduro, who it describes as a dictator, Reuters reported.

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As the political crisis in Venezuela rumbles on, a number of creditors are squaring up in what promises to be one of the most complicated debt restructurings in history, the Financial Times reported. What will make a workout so tricky to resolve is not just the amount of IOUs sitting on the balance sheet of the South American nation, the fourth-largest economy in the region, but the diversity of its creditor base. In recent months, some aggrieved lenders have filed lawsuits against the government and the state-owned oil company, PDVSA, sparking some unease from the rest.

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As if muddling through a humanitarian crisis and a sharpening political stand-off between authoritarian Nicolás Maduro and opposition leader Juan Guaidó weren’t bad enough, Venezuela will soon have to wade through what is said to be one of the messiest debt restructurings in history, the Financial Times reported. What will make Venezuela’s forthcoming debt workout so difficult to resolve is not just the amount of IOUs sitting on its balance sheet, but the diversity of its creditor base. Like most metrics in Venezuela, these exact figures are difficult to come by.

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