- 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.