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INTL Venezuela Misses Another Debt Payment, Raising Stakes for Bondholders
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  1. #1
    Join Date
    Jul 2001
    "outside the box"

    Venezuela Misses Another Debt Payment, Raising Stakes for Bondholders

    Latin American nation has $9 billion in bond payments due in 2018

    Jan. 2, 2018 5:46 p.m.

    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 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. The firm also said there is a one-in-two chance that Venezuela will default on payments due within the next three months.

    With many Venezuelan bond payments arriving late or not at all, bondholders can now push through the U.S. courts for full payment on nearly all Venezuelan bonds, attorneys say. ​​Most Venezuelan public debt issued in international markets is governed by New York law.

    Court litigation provides the best chance for payment for holders of $36 billion in sovereign bonds, Richard Cooper and Boaz Morag, two lawyers in the litigation and arbitration group at Cleary Gottlieb Steen & Hamilton LLP, argued in a recent white paper.

    “What I expect to happen over the upcoming weeks is that we’ll see these bondholders organize themselves in response to the lack of payment despite Venezuela’s assertions that it will continue to pay,” said Michael Roche, emerging-market fixed-income strategist at Seaport Global Holdings LLC.

    But other analysts say investors may prefer to hold off, hoping they will continue to get paid late and sporadically rather than starting a process that lawyers say could be one of the most complicated defaults ever. Venezuelan President Nicolás Maduro has insisted Venezuela will pay off its near-term obligations. The government also has said it wants to restructure all remaining debt, which analysts put as high as $150 billion.

    But any restructuring process is made difficult because Mr. Maduro and other government officials face U.S. sanctions, impeding most foreign investors from negotiating with the administration.

    The government appears to be prioritizing payments for its state oil firm, said Siobhan Morden, managing director at Nomura. That could be a sign that Mr. Maduro is looking to protect the country’s oil reserves and energy assets that creditors might go after, she said.

    Petróleos de Venezuela SA, the state-owned oil company, recently made $340.1 million in late payments, according to Caracas Capital, and PdVSA bonds are trading at a premium to the country’s sovereign bonds.

    About 95% of dollars in Venezuela are from sales of oil. But that revenue stream has been fading as the country’s economic crisis and unpaid debts have steadily dropped production. Oil prices are half their peak from 2008. The country’s oil output has fallen 12% over the past two months, according to the Organization of the Petroleum Exporting Countries.

    Economic mismanagement has left Venezuela on the edge of a humanitarian disaster, economists say. Mr. Maduro’s leftist government has cut food and medicine imports by more than 70% since 2013 to preserve limited resources for debt payments, according to investment bank Torino Capital LLC.

  2. #2
    Join Date
    Oct 2014
    It's okay! They're launching their own cryptocurrency which will fix everything! It's called the Petro, and it's backed by oil.

    Of course, why anyone would believe Maduro on anything up to and including assertions about the color of the sky at this point is beyond me.

  3. #3
    Join Date
    Dec 2017
    Swimming in sea quarks
    Venezuela has no intention of paying their debts imo.
    Facts?? We don't need no stinkin facts...

  4. #4
    Join Date
    Jan 2005
    Portland, Oregon
    I've lately had several eBay sellers with the same mañana attitude towards fulfilling their end of the business transaction. I pay promptly and they create the automatic shipping label that generates a USPS tracking code, but apparently it's just so darned inconvenient for them to actually take the friggin' item to the Post Office (for literally weeks). My brother is the same way about paying bills and rent, and I've never been able to convince him that it's not really a good idea to pay only whenever he feels like it.

    Mañana (Is Soon Enough For Me) (Peggy Lee, 1948, 2:58) - No doubt this is racist by today's PC standards (cultural appropriation!)

  5. #5
    Join Date
    Jul 2005
    Happy on the mountain
    Should be a lesson to bondholders everywhere ...
    The wonder of our time isn’t how angry we are at politics and politicians; it’s how little we’ve done about it. - Fran Porretto

  6. #6
    I don't think Venezuela CAN pay its debts, and that has been obvious for some time now; but it has suited the Powers The Be to drag this out and not declare the country in default; and occasionally the country pulls a few Bolivars out of a Hat and sends them on as an interest payment.

    To pay bills, you have to have money; that why bankruptcy courts exist; I've said it before that the obvious thing to do is for the IMF (or whomever) to declare the country bankrupt and yeah bondholders are out of luck - that's called taking chances when you invest; no one is going to bail me out if I make a stupid investment, these banks or whoever should just suck it up, put on their Big Boy pants and deal with it.

    On the other hand, no one ever has to invest a red centavo in the country ever again unless they are fool hearty or willing to wait for "regime change" from within or without.

    Given the state of things, I don't think Maduro has much longer; and if the Big Corporate/Banksters refuse him any more credit time, he might go even faster.

    Expecting him/his government to pay their bills is like expecting someone who earned 25 dollars last month to pay a debt of 150 if they have no savings, it just isn't going to happen; you can put them in jail if you like, but that still won't get you your money back.
    expatriate Californian living in rural Ireland with husband, dogs, horses. garden and many, many cats

  7. #7
    Join Date
    Jul 2005
    Happy on the mountain
    these banks or whoever should just suck it up, put on their Big Boy pants and deal with it

    Banking today is all about privatizing gains and socializing losses. Not gonna be any 'just deal with it' as long as banksters run governments.
    The wonder of our time isn’t how angry we are at politics and politicians; it’s how little we’ve done about it. - Fran Porretto


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