Venezuela

Venezuela’s efforts to restructure its debt may have triggered an initial stampede for the exits, but some investment funds are maintaining their portfolios or even beefing them up, betting that other investors’ distress could spell opportunity, Reuters reported. President Nicolas Maduro spooked bondholders this month when he announced plans to restructure some $60 billion in bonds as his socialist government struggles with an economic crisis brought on by years of mismanagement. Yet Maduro also said the country would keep servicing its obligations for now.

Petróleos de Venezuela is the oily lifeblood of the country which owns it, so default should spell the beginning of the end for creditors, the Financial Times reported in a commentary. PDVSA’s exports are the only reason the government has been able to meet foreign debt repayments. After four years of recession and shortages of everything its citizens need, Venezuela has finally run out of road. Well, almost. Last week, the government was deemed in default by credit rating companies, following a delay in bond payments.

Despite reassurances from the Venezuelan government and state-run oil company that checks for past-due bond payments are in the mail, few investors have actually seen the money yet, Bloomberg News reported. No matter. Bonds are rising, paring some of the selloff sparked by President Nicolas Maduro’s announcement Nov. 2 that he would seek to renegotiate the nation’s billions of dollars in overseas debt obligations. Investors have little choice but to take his word for it and assume the procedural delays in the payment chain, which have worsened since U.S.

Russia signed an agreement to restructure $3.15 billion of debt owed by Venezuela, throwing a lifeline to a crisis-wracked ally that’s struggling to repay creditors, Bloomberg News reported. The pact gives Venezuela some much-needed breathing room as it faces the much more complicated task of restructuring its $140 billion of bonds and foreign loans. For Russia, the deal underscores the costs that come with President Vladimir Putin’s geopolitical ambitions across the globe. A $900 million hole had been left in its 2017 budget plan by Venezuela’s failure to pay on time.

Venezuela and its state oil company are now officially in default. It changes nothing for bondholders, Bloomberg News reported. The declarations in the past 24 hours by S&P Global Ratings, Moody’s Investors Service and Fitch Ratings only confirmed what they already know -- PDVSA and the government are late on debt payments amid an unprecedented cash crunch and difficulties getting money through the chain of intermediaries.

Venezuela, one of the world’s riskiest credits, was declared in default by S&P Global Ratings after missing two interest payments on its debt, Bloomberg News reported. The nation, home to the world’s largest oil reserves, owed investors about $200 million and failed to make those payments by the end of a 30-day grace period that expired over the weekend, S&P said in a statement in which it lowered the country’s rating to SD. Plagued with payment delays and running low on cash, it’s the first time in recent years the government has exceeded the buffer period on its bonds.

Venezuela’s state electricity company was declared in default by the trustee for its bonds after it failed to make a $27.6 million interest payment, Bloomberg News reported. The electric utility, however, said that the cash was sent Nov. 8 and was being held up due to “operational changes.” Traders had long suspected that Elecar’s $650 million in notes coming due next year could be a candidate for the cash-strapped government to stop paying as it struggles to stay current on its debt.

In a related story, Bloomberg News reported that Venezuela is set to pump the least oil in almost three decades, just when it needs petrodollars the most. Output is expected to slump to 1.84 million barrels a day next year, the lowest compared with official government data since 1989, according to a survey with four analysts compiled by Bloomberg. Rig counts hit a 14-year low in October, as drilling companies including Schlumberger Ltd. reduce their exposure in the nation due to unpaid bills. Owner of crude reserves larger than Saudi Arabia’s, Venezuela is teetering on the brink of default.

Venezuela is stumbling closer to a full-blown, formal default on its debts, with bondholders reporting that they had yet to receive the full bond payment that was due last Friday and a finance industry body now about to decide whether default insurance should be paid out, the Financial Times reported. Venezuelan president Nicolás Maduro last week announced that the country would have to restructure its foreign debt pile, but promised to make one last $1.1bn payment on a bond issued by PDVSA, the state oil company.

In a related story, Bloomberg News reported that Venezuela and Russia have agreed on terms for restructuring about $3 billion of the Latin American country’s debt and the deal will come soon, Finance Minister Anton Siluanov said in Moscow. “The Venezuelans have confirmed the terms we’d agreed on, and that’s why the process will move into the concluding phase,” Siluanov told reporters on Wednesday. Russia had offered to reschedule debt payments over two stages, with payments on most of the state loan to be delayed to the second phase, Siluanov said late last month.