Venezuela

Ever since the price of oil collapsed in mid-2014, there’s been a broad consensus among the bond-market crowd that Venezuela was going to default. Not immediately, they said, but at some point down the road. Three years on, that time may have arrived, Bloomberg News reported. On Friday, the government-run oil giant PDVSA owes $985 million. Six days later, it’s on the hook for another $1.2 billion. Not only is that a daunting sum for a country whose foreign-currency reserves recently dipped below $10 billion for the first time in 15 years, but it figures to be a logistical nightmare too.

Venezuelan bonds tumbled after the government claimed a surprise victory in regional elections and the opposition cried fraud. The perceived foul play increases the risk of further sanctions against the oil producer. The extra yield investors demand to hold Venezuelan debt over U.S. Treasuries widened 116 basis points to 32.32 percentage points, the highest in the world, Bloomberg News reported. A dollar bond issued by state-run oil company Petroleos de Venezuela SA that matures in two weeks fell 1.6 cent to 92.3 cents on the dollar.

Russia and Venezuela may sign an agreement on restructuring Venezuelan debt by the end of the year if terms drafted by their finance ministries are approved, said Russian Finance Minister Anton Siluanov. “In general, we worked out with the finance ministry such conditions,” Siluanov told reporters in Washington, where he attended the International Monetary Fund fall meeting, Bloomberg News reported.

Investors are gaining confidence that Venezuela will make its next big bond payments. Notes from the state oil company that mature in November climbed to 94.5 cents on the dollar Wednesday, a three-year high, while amortizing bonds due in 2020 rose to their highest price since they were issued last year, Bloomberg News reported. There’s a $985 million payment due Oct. 27 for the 2020 bonds, and $1.2 billion due Nov. 2 on the securities maturing next month.

Venezuela will fulfill its sovereign-bond obligations even though U.S. sanctions are affecting its ability to conduct normal debt relations, said President Nicolas Maduro. Maduro spoke at the Russian Energy Week conference in Moscow on Wednesday as his nation’s struggling economy becomes increasingly reliant on the Kremlin’s support, Bloomberg News reported. The Latin American oil producer is struggling to meet its financial obligations and remains on course for a fourth consecutive year of economic contraction in 2017, according to Fitch Ratings.

Venezuelan investors are getting ready for a wild ride over the next five weeks as the government stares down $3.5 billion in debt payments, Bloomberg News reported. While all the country’s due dates in the past year have elicited serious hand-wringing, the next few are on a whole new level. That’s because unlike recent transactions in which a 30-day grace period allowed Venezuela to avoid default, the upcoming deadlines have no leniency. Further complicating matters, some of the bonds are backed by a majority stake in Citgo Holding Inc., potentially putting one of the biggest U.S.

Venezuela has a dubious backstory when it comes to paying sovereign debt. It’s tied with Ecuador for the most defaults since 1800, Bloomberg News reported. But for anyone betting that a default would catapult President Nicolas Maduro from office even as he holds on in the face of untold economic misery, here’s a more relevant marker: Not once on those 10 occasions, most recently in 2004, did a missed payment spur a change in government. In fact, defaults around the globe have triggered governmental change less than 15 percent of the time since 1992, according to data compiled by Bloomberg.

Venezuela, one of the world’s riskiest countries for investors, is late on a debt payment, Bloomberg News reported. The intermediaries tasked with passing along interest payments for the cash-strapped nation haven’t received the funds for an $185 million coupon that was due Sept. 15, according to people with knowledge of the matter. Investors interviewed by Bloomberg say they haven’t been paid, and brokers say their clients are still waiting on the cash. The government has a 30-day grace period -- now 25 days -- to make good on the payment before triggering an event of default on the notes.

One of the largest holders of Venezuelan bonds says U.S. sanctions are giving Nicolas Maduro’s government greater incentive to pay its debts. The penalties imposed late last month restrict the country’s ability to restructure its obligations, meaning the president’s only option is to keep scraping up enough cash to keep current on overseas notes, Bloomberg News reported.

For years, investors in Venezuela and its state oil company, Petroleos de Venezuela SA, took comfort knowing that in the event of a default, there’d be assets they could potentially seize to recoup some of their losses, Bloomberg News reported. But for bond buyers with an even bigger appetite for risk, those willing to throw themselves at the mercy of President Nicolas Maduro’s survival and track record of making good on debt payments, there’s another option: Electricidad de Caracas, the state-run electric utility.