Venezuela
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Holders of PDVSA’s 2017 bonds were suddenly filled with dread by Tuesday’s close as rumours of the overdue maturity payment being made could not be confirmed. Its credit default swap price worsened on the expectation a credit event would be declared. -
President Maduro’s surprise restructuring announcement only makes things murkier for Venezuelan bondholders.
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Despite Venezuela offering some further colour on its proposed debt restructuring on Friday, the government’s plan is still unclear as its bond prices plummeted.
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Venezuelan president Nicolás Maduro’s announcement on Thursday that he would restructure the country’s debt left bondholders in “no man’s land”, after he appointed a politician that no US person is allowed to deal with as head of the restructuring group.
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Waiting for a default on Venezuela’s bonds has been like waiting for Godot. Low oil prices and macroeconomic mismanagement have led to a catastrophic collapse in economic activity. Our colleagues in country risk are forecasting a 7.5% GDP contraction.
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South American development bank Corporación Andina de Fomento (CAF) returned to the dollar market this week with a $1bn five year fixed-rate note.
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Corporación Andina de Fomento (CAF) is this week set to bring its second dollar benchmark of the year, the proceeds from which will be used to pay off a $1bn floating rate note maturing next year.
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Market analysts are confident that Venezuela's PDVSA can make imminent debt payments, but there is little consensus beyond that after the oil company waited until the last possible moment to release funds for a principal payment on Friday.
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Venezuelan oil giant PDVSA left bondholders clueless on Thursday evening as to whether it would make a $985m amortisation and interest payment on time on Friday, with some calling the chances of a large and ugly default no better than a coin toss, writes Oliver West.
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As bondholders await some kind of communication on overdue coupon payments from Venezuela, PDVSA and Electricidad de Caracas, Standard & Poor's has said it is “uncertain” about oil company PDVSA’s ability to pay forthcoming bond maturities.
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The International Swaps and Derivatives Association (ISDA) on Wednesday published a protocol that limits the scope of legacy credit default swaps referencing Venezuelan debt to obligations not restricted by recent US sanctions on the country.
