LatinFinance - January/February 2018 - 11
COVER
STORY
VENEZUELA
Venezuela is edging closer to default on its foreign debt as vulture
funds snap up the country's bonds and push an acceleration clause for
missed coupon payments. By Jason Mitchell
A default
foretold
Venezuela has sent mixed signals. On November 3, President Nicolás Maduro said the
government planned to refinance or restructure all its foreign debt. But even as Maduro
voiced his intention to rearrange Venezuela's bond obligations, he also vowed to keep up with
coupon and principal payments.
Ten days later, Vice President Tareck El Aissami presided over a 30-minute meeting with
nearly 100 foreign bondholders and their representatives in Caracas. Yet he offered no
specific details on a refinancing offer. The government did, however, hand out gift bags with
Venezuelan chocolate and coffee to attendees.
"People say Venezuela will declare a default," Maduro said in nationally televised address
in mid-November. "It will never happen. We will not default. We always have a clear strategy,
and the strategy is to renegotiate the foreign debt."
Maduro has put El Aissami and Finance Minister Simón Zerpa in charge of the negotiations
with bondholders. But both men are on a US sanctions list, which the administration of
President Donald Trump has beefed up to include more names than President Barack Obama
originally listed in 2015. The sanctions accuse prominent politicians of corruption and drug
trafficking. Most US investors decline to deal with them, afraid of facing penalties from the US
government.
"I am not sure if the government realizes that it will not be able to bring a restructuring to
fruition," says Francisco Rodríguez, chief economist at Torino Capital, a broker dealer in New
York.
Rodríguez also suspects the posturing by Venezuelan officials is more political than
practical. "It is not a very sophisticated government, and I am not sure if they know how
complicated the whole process would be."
According to Torino Capital, Venezuela has around $63 billion in outstanding cross-border
bonds. Venezuela's central bank puts the foreign debt closer to $90 billion. Analysts say it
January/February 2018 - L ATINFINA NCE.COM 11
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Table of Contents for the Digital Edition of LatinFinance - January/February 2018
Contents
LatinFinance - January/February 2018 - Cover1
LatinFinance - January/February 2018 - Cover2
LatinFinance - January/February 2018 - Contents
LatinFinance - January/February 2018 - 2
LatinFinance - January/February 2018 - 3
LatinFinance - January/February 2018 - 4
LatinFinance - January/February 2018 - 5
LatinFinance - January/February 2018 - 6
LatinFinance - January/February 2018 - 7
LatinFinance - January/February 2018 - 8
LatinFinance - January/February 2018 - 9
LatinFinance - January/February 2018 - 10
LatinFinance - January/February 2018 - 11
LatinFinance - January/February 2018 - 12
LatinFinance - January/February 2018 - 13
LatinFinance - January/February 2018 - 14
LatinFinance - January/February 2018 - 15
LatinFinance - January/February 2018 - 16
LatinFinance - January/February 2018 - 17
LatinFinance - January/February 2018 - 18
LatinFinance - January/February 2018 - 19
LatinFinance - January/February 2018 - 20
LatinFinance - January/February 2018 - 21
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LatinFinance - January/February 2018 - Cover3
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