Venezuela

Venezuela has put off a reckoning on its tens of billions of dollars in debt, but its ability to avoid a disastrous default will probably require much higher oil prices than appear likely in the next year or two, financial experts say. With its oil production and international reserves falling at an accelerating rate, the government is juggling as fast as it can to pay for imported food and medicines while meeting its short-term bond payments, the International New York Times reported.

Venezuela’s willingness to honor its debts is coming under fresh scrutiny even as the will-they-or-won’t-they jitters surrounding a $2.1 billion payment this week have largely subsided. The bonds from the state oil company maturing Wednesday traded as low as 94 cents on the dollar last week, showing a lack of confidence that Petroleos de Venezuela SA would come up with the needed cash, Bloomberg News reported. The securities shot up to 97 cents on Friday after PDVSA issued a statement saying it had already begun the payment process.

Venezuela’s state-owned oil company should be stopped from plundering its U.S. subsidiary Citgo Holding Inc., according to court papers filed Monday evening by a creditor seeking $1.4 billion from the South American country. Canadian mining company Crystallex International Corp. asked a Delaware federal judge for an injunction blocking Petróleos de Venezuela SA—also known as PdVSA—from taking cash or transferring assets from Citgo, the U.S. crude refiner owned by PdVSA.

The sell-off in dollar bonds issued by Venezuela and state-owned oil company PDVSA picked up steam on Tuesday as the spiraling crisis in the South American country triggered fresh fears of a default ahead of a multi-billion bond payment due next week, the Financial Times reported. The country’s benchmark 2027 bond fell 3 per cent to a 10-month low of 44.6 cents on the dollar. Bonds issued by PDVSA also took a leg lower, with the note due in 2035 down 2.7 per cent at 43.1 cents on the dollar.

Traders boosted their bets on a Venezuela default as state oil company known as PDVSA faces a $2 billion bond payment next week, Bloomberg News reported. The implied probability of nonpayment in the next 12 months surged to 56 percent in March from 40 percent in February, according to credit-default swaps data compiled by Bloomberg.

The bitter political standoff between Venezuela’s government and opposition may have cost the crisis-torn country nearly half a billion dollars in loans from one of its last active multilateral lenders as a fourth year of recession grips the economy, Bloomberg News reported. The Development Bank of Latin America, or CAF, is said to be reconsidering whether to issue fresh loans to Venezuela -- a principal member and home to its headquarters -- due to a legal dispute between the National Assembly and the Supreme Court, according to three people with direct knowledge of the matter.

Just how much do you trust Venezuela? That’s the question to ask as $2 billion of bonds from the state-owned oil company that come due next month trade at about 95 cents on the dollar, Bloomberg News reported. Traders with nerves of steel might be able to bank a quick profit if all goes well and Petroleos de Venezuela SA honors the debt. But there’s always the chance that won’t happen. Venezuela investors have been on default watch for years now, racking up some of the world’s highest yields for dollar-denominated debt amidst the omnipresent threat that it will all go belly up at some point.

Traders reduced their bets on a default of Venezuela’s dollar debt over the next year amid a thin repayment schedule in the first quarter, Bloomberg News reported. The implied probability of nonpayment over the next 12 months plunged to 44 percent in January from 59 percent at the end of December, according to credit-default swaps data compiled by Bloomberg. That’s the first time the risk of default has been below 50 percent since September. The longer-term outlook is still a little murky, with the odds of a credit event over the next five years at 89 percent.

A thousand abandoned concrete huts dot a plain beneath a remote mountain range here in western Venezuela, surrounded by empty, rusting silos and irrigation canals covered with weeds. This is the Diluvio agro-industrial commune, built with $2 billion of Venezuelan capital by Brazilian construction giant Odebrecht SA, which last month admitted to giving out almost $800 million in bribes to secure contracts in 12 countries, including Venezuela.

Carrying trash bags and backpacks filled with cash, Venezuelans fretfully lined up on Friday outside banks across the country to exchange currency that President Nicolás Maduro said would soon be void. Mr. Maduro’s decision that all 100-bolívar notes must be exchanged has caused panic, partly because the deadline keeps shifting and many banks and businesses are already refusing to accept them. For many people without bank accounts, the bills, which have long been the country’s highest-denomination note, are their primary means of saving money.