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Freitag, 3. November 2017

Venezuela is Defaulting, Maybe . . . Maybe Not posted by Mitu Gulati

Venezuela is Defaulting, Maybe . . . Maybe Not

posted by Mitu Gulati
The news out of Venezuela with regards to its debt situation has been keeping investors (who love the high returns, but dislike the uncertainty) in a tizzy, to put it mildly. But today's news was perhaps the most bizarre yet.  Mr. Maduro, on the one hand, announced that PDVSA (the big state-owned oil company that produces 95% of Venezuela's foreign currency earnings) was making its latest payment to creditors (due today) and, on the other hand, announced that a restructuring was being planned immediately.
What? Why? How?
If the plan is to restructure because there is no money, then why were the payments today (and a few days ago) made? That makes no sense to my little brain.
And how in the world is there going to be a restructuring when there are US sanctions prohibiting just that? Through some Russian proxy? Or Chinese? Via a loophole in the sanctions regime?
Katia Porzecanski, sovereign debt guru, has a super article up on this puzzle already at Bloomberg (with co authors Patricia Laya, Ben Bartenstein, and Christine Jenkins).

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