Venezuela

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.

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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.

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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.

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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.

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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.

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Venezuela is planning to sell some of its shares in the CAF Latin American development bank to pay down its debt with the lender, representatives of the South American country’s opposition said, Reuters reported. The sale was expected to be discussed at a meeting of the CAF’s board on Tuesday, said two opposition lawmakers and a member of a committee named by the opposition to restructure the country’s debt, who warned that the move would jeopardize the crisis-stricken nation’s economic recovery.

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After decades of dominating its oil industry, the Venezuelan government is quietly surrendering control to foreign companies in a desperate bid to keep the economy afloat and hold on to power, the International New York Times reported. The opening is a startling reversal for Venezuela, breaking decades of state command over its crude reserves, the world’s biggest. The government’s power and legitimacy have always rested on its ability to control its oil fields — the backbone of the country’s economy — and use their profits for the benefit of its people.

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As Venezuela enters its third full year in default, its obligations have become something of an afterthought to even its biggest creditors, Bloomberg News reported. Worth just pennies on the dollar, tens of billions in bonds routinely go days at a time without trading. Sanctions bar U.S. investors from buying them and make the prospect of a full-scale restructuring all but impossible. And with no end in sight to the political stalemate in Caracas, it’s no wonder few creditors have taken the costly step of taking the government to court.

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Venezuela’s opposition-run congress said on Tuesday it had set aside $20 million held in accounts in the United States to pay for litigation abroad as part of efforts to protect the country’s offshore assets from lawsuits by creditors, Reuters reported. Offshore assets including U.S. refiner Citgo have long been seen as attractive by investors holding the country’s defaulted bonds and companies seeking to be paid back for the nationalisation of their holdings.

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Venezuela’s state-run oil company PDVSA said its financial debt fell less than 0.1% in 2019 from the prior year to some $34.5 billion, though it remained in default on its bonds as sanctions freeze it out of the global banking system, Reuters reported. PDVSA, which is short for Petroleos de Venezuela S.A., has stopped paying interest on most its bonds, and together with Venezuela’s government has accumulated billions of dollars in late interest payments.

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