The Venezuela Creditors Committee has expressed confidence that an orderly debt restructuring can occur following an electoral agreement reached between the government and the opposition. This agreement led to the United States easing some sanctions in the oil sector, providing hope for investors in Venezuelan sovereign bonds.
Under the Biden administration, new rules have been issued that lift bans on secondary trading of Venezuelan bonds and allow the state-run oil company PDVSA to sell and export to its chosen markets. These measures were taken in response to the agreement between the government and the opposition, which allows for international observers and sets the stage for the presidential election in 2024.
The announcement of the easing of sanctions led to a significant increase in the prices of Venezuelan sovereign bonds, as investors anticipate new debt restructuring agreements. The Venezuela Creditors Committee, representing investors with $11 billion in bonds, stated that they are confident in the actions taken by the U.S. government and the commitments made by the Maduro administration and the Venezuelan opposition.
PDVSA, which carries a debt of over $60 billion, stopped making payments to bondholders at the end of 2017, leading to lawsuits by several creditors. To prevent further legal actions, the maturities of the bonds were extended to 2028 by the country’s assembly.
While U.S. investors currently control a significant portion of Venezuelan sovereign and PDVSA debt, the easing of sanctions has prompted small funds outside the United States to increase their exposure to Venezuelan bonds in anticipation of renegotiations.
Source: Reuters