Venezuela Weekly Report

Running Out of Time

December 31, 2018BancTrust & Co. Research Team
  • Bondholders at the limit of its patience
  • Broken promises to Crystallex
  • Oil production’s uncertain figures
  • Hyperinflation Chronicles

It has been more than a year when the government of Venezuela announced the supposed beginning of a restructuring process for international debt. No advance has been made by Venezuela or PDVSA, and bondholders have been patiently waiting for payments or a restructuring proposal.

Now, bondholders are at the limit of its patience and rumors of certain groups of bondholders organizing to assess its possibilities against Venezuela are becoming a reality.

Yesterday, a statement of one of the group of creditors – probably one of the biggest – was released saying they began looking for strategic alternatives with the hiring of Cleary Gottlieb. This group – denominated Venezuela Creditors’ Committee – accumulates a total of USD8bn of Venezuela, PDVSA and ELECAR’s debt.

At this point, and after months of assessing the country’s economic and political conditions, it is likely bondholders are considering initiating a process where they can benefit themselves from assets held abroad either by Venezuela, PDVSA or ELECAR.

Nonetheless, we believe the action responds to bondholders’ necessity to not stay behind the actions of other groups of interested parties, which have already started the persecution against important assets like CITGO.

This situation complicates the panorama for Venezuela, which practically has enjoyed a year of grace and now has all eyes over CITGO and even its oil production.

However, creditors also have an important inconvenience when it comes to a mediation scenario, as current US sanctions against Venezuela prohibits any US person to hold any type of negotiation with any Venezuelan party related to the government.

We don’t expect any announcements or recognitions from the government in the short-term. But if the action of this USD8bn group replicates among other creditors, and it goes public, then the government will be obligated to address the issue. But, under Maduro’s figure, the solution will not be optimal for bondholders or the country.

Venezuela Weekly Report

Recovery “On Track”

December 31, 2018BancTrust & Co. Research Team
  • Quevedo affirms oil output is recovering
  • Imports of 300kbpd of refined products coming
  • USD6bn in financing for oil and mining
  • New CAF loan request
  • ONGC Videsh received a payment of USD32mn

OPEC meeting was the focus of news in oil market, given the importance of cartel’s cohesion to face renewed bearish pressures to crude prices. Even when meeting’s result was not the desired, it did leave a series of commentaries worthy of assessment, especially those from Venezuela’s Oil Minister Manuel Quevedo.

Venezuela Weekly Report

Another Domino Falls

December 31, 2018BancTrust & Co. Research Team
  • Crystallex joins the list
  • Venezuela has neglected others like Rosneft’s.
  • Fourth consecutive year of recession
  • Fitch forecasts current account deficit by 2019

Once again Conoco´s strategy was replicated, and this time Crystallex joins the list. Last Friday, Venezuela and the Canadian gold miner settled USD1.2bn arbitration claim that will temporarily suspend Crystallex’s push for a court-ordered auction of Citgo Petroleum Corp.

Venezuela Weekly Report

Higher Wages Coming

December 31, 2018BancTrust & Co. Research Team
  • Petro as a proxy for salaries
  • Republic’s indebtedness
  • New efforts to increase ailing crude exports 

On August, when the latest economic measures were announced, the whole project had as a common point the new government’s cryptocurrency, petro.

Venezuela Weekly Report

Request for Transparency

December 31, 2018BancTrust & Co. Research & Strategy Team
  • Updated data is on the way
  • Venezuela and the OPEC
  • Fitch on PDVSA

This Thursday, and after days of rumors, it was confirmed by Gerry Rice, IMF Chief Spokesperson, that the IMF was currently in talks with Venezuela for the case of missing official data since 2016. Now, it appears Venezuela is working to solve this issue, which indicates that updated data is on the way.

  • Tuesday, January 16 2018

    Venezuela:

    - Yesterday the President Nicolas Maduro gave its yearly speech which should be something close to the state of the union and that according to the constitution should be presented in front of the National Assembly. However, this year and arguing the illegality of the National Assembly, the decision was to give his speech in front of the National Constituent Assembly. In detail, more than a state of the union this was one of the usual speech of the President with not much data to collect. Among

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  • Monday, January 15 2018

    Venezuela:

    - The dialogue meeting held in the Dominican Republic between members of the opposition and the government last weekend culminated again without any results. International mediators indicated that although some agreements were reached, several points remain pending and both parties will meet again this Thursday, January 18. In our opinion, it was expected that results would not be achieved,as we have been saying we believe that the most likely to happen is that the negotiation rounds will culmin

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  • Friday, January 12 2018

    Venezuela:

    - The National Electoral Council (CNE in Spanish) announced that it has approved the schedule for the validation of political parties that did not participate in the last municipal elections which it will take place on 27 and 28 of January. The process will be carried out to comply with the order of the National Constituent Assembly (ANC), which has as its sole purpose to be another obstacle for the opposition. We believe that at the moment the attention is focused on the negotiations in the Dom

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  • Thursday, January 11 2018

    Venezuela:

    - The situation regarding Venezuela’s debt with Brazil received yesterday two mixed updates, as the Brazilian Ministry of Finance reported that the first paid an old debt but that it is still in arrears with another payment. In detail, the ministry informed that Venezuela paid USD262.5mn – corresponding to the May-August period of 2017 – on 5 January as part of their commitments under the Reciprocal Credit and Payments Agreement (CCR), which is part of the benefits of the Latin American In

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