Venezuela

The Venezuelan debt crisis could be on the verge of a new milestone as a $650 million bond matures Tuesday with little hope it’ll get paid, Bloomberg News reported. The notes from the state-run electric utility were always considered among the country’s riskiest securities because the downsides to a default are relatively minor. They don’t contain any cross-default rules that would affect sovereign debt or notes from the state oil company, and the utility doesn’t have any overseas assets that investors could try to seize.

Venezuela needs urgent debt relief and would look to give bondholders small payments in the short-term while pushing back maturities in order to allow the country to return to growth, according to the economic adviser of opposition candidate Henri Falcon, Bloomberg News reported. “Venezuela’s debt is in default and needs to be restructured in the nation’s best interests to get relief in the short term,” Francisco Rodriguez said in an interview on Thursday.

Venezuela's foreign minister said on Tuesday that U.S. sanctions against the ailing oil nation are making foreign debt renegotiation more difficult and causing "panic" at global banks, the International New York Times reported on a Reuters story. Venezuela is undergoing a major economic crisis, with millions suffering food and medicine shortages, and President Nicolas Maduro's socialist government is late in paying interest of some $1.9 billion on its debt. The U.S.

It’s been more than three months since the first of more than a dozen Venezuelan bonds was declared in default, and the arrears keep stacking up, Bloomberg News reported. Wall Street investors reluctant to give up hope they’ll eventually be paid are in limbo after the nation and its state oil company busted through grace periods on about $1.7 billion of debt payments, rating firms declared many securities in default and swaps that provide insurance against non-payment were triggered. For now, everyone is just waiting.

Emerging markets trade group EMTA has recommended that bonds issued by Venezuela’s state-owned oil firm PDVSA should be traded “flat”, or without accrued interest, the way bonds in default are typically traded. The move follows a similar advisory from EMTA on Venezuelan sovereign bonds last month and is likely to extinguish any lingering belief that Caracas might try and avoid a default by PDVSA -- the source of 90 percent of Venezuela’s export revenue -- to protect its key oil assets, Reuters reported.

Venezuelan debt is kicking off 2018 on a tear. The nation’s bonds, which led global losses in 2017 after the government declared it needed to restructure its debt, have returned a world-leading 12 percent, Bloomberg News reported. That’s four times what investors got from second-place Tajikistan, according to data compiled by Bloomberg.

Bonds investors are finally acting like they’ve lost hope that Venezuela will make any future debt payments, The Wall Street Journal reported. Traders debated for weeks about whether to continue pricing the oil-rich country’s sovereign debt with the assumption that it would keep making interest payments. But as the pile of unpaid coupons racked up, the association for emerging market debt traders this week threw in the towel and announced that from now on, the market should assume Venezuela isn’t likely to pay.

Fund managers holding Venezuela government bonds face a day of reckoning after months of waiting for more than half a billion dollars in late interest payments, Bloomberg News reported. Since November, investors following guidelines established by the Emerging Markets Traders Association have marked their Venezuela bond holdings to include all the interest they were owed, even though it hadn’t shown up yet. The trade group decided to scratch that rule Monday, and say that beginning today the nation’s debt will trade flat, or without accrued interest.

Venezuela’s bonds have lost about three-quarters of their value, reflecting a dozen missed payments by the government and the state-owned oil company. But many of their bondholders are still feeling flush, The Wall Street Journal reported. A number of investors have made their money back and more, thanks to coupon payments topping 13% and large principal payments that typically begin three years before a bond matures. A recent example includes bonds from state-oil company Petróleos de Venezuela SA, or PdVSA, which matured in November.

Venezuela has defaulted on another debt obligation, according to S&P Global Ratings, intensifying investor fears about the country’s ability to make more than $9 billion in bond payments due in 2018,The Wall Street Journal reported. The ratings firm said Tuesday that Venezuela failed to make $35 million in coupon payments for its bonds due in 2018 within a 30-day grace period. The government and the state-owned oil company are now behind on $1.28 billion in payments, according to investment firm Caracas Capital. S&P classifies these missed payments as defaults.