Venezuela’s 30 Minutes of Debt Talks Leave Bondholders Guessing
Venezuela’s much-vaunted restructuring meeting with bondholders concluded after about 30 minutes with little insight for investors who made the trek to Caracas.
Vice President Tareck El Aissami, the only government official to speak, devoted most of his remarks to railing against Donald Trump and global financiers who he said have conspired to keep the country from making debt payments on time. He pledged Venezuela would continue to honor its obligations while working to form committees with bondholders to figure out the next steps. He offered no specific proposals for restructuring, according to people who attended the meeting, which wasn’t open to journalists.
The event, held across from the presidential palace at Palacio Blanco, was accompanied by much fanfare, with a literal red carpet laid out for attendees who passed through an honor guard on their way into the building. After government Twitter accounts sent repeated invitations to the meeting over the past week, it appeared that no more than 100 people showed up, and none of them were allowed to ask any questions publicly. Finance Minister Simon Zerpa, Oil Minister Eulogio del Pino, PDVSA President Nelson Martinez and planning vice president Ricardo Menendez were in attendance.
President Nicolas Maduro had summoned holders of bonds issued by the government and state oil company Petroleos de Venezuela to begin a renegotiation of more than $60 billion of international debt. The nation’s cash crunch is worsening, with central bank reserves at a 15-year-low and oil output sinking to below 2 million barrels a day, the lowest since 1989.
It was never clear what the country could accomplish in terms of a restructuring. U.S. sanctions prohibit the type of bond swaps that would usually be part of any debt relief, and investors have shown a reluctance to engage with a government that’s become an international pariah amid allegations of anti-democratic activities. But while Venezuela is the riskiest sovereign debt in the world, it has also paid outsized returns for fund managers over the past several decades under two successive socialist governments.
The government and state companies have struggled to make bond payments on time in recent months, and currently owe more than half-a-billion dollars in overdue interest. El Aissami blamed an international financial blockage for making it difficult to get the money to investors, and citied moves by Citibank to close some of the country’s accounts.
The Treasury had advised U.S. investors to exercise extreme caution to avoid running afoul of sanctions imposed by the Trump administration.