Venezuela Near Term Debt View Bullish on Oil, Event Risk: Nomura

Venezuela Near Term Debt View Bullish on Oil, Event Risk: Nomura
2017-07-18 15:31:11.828 GMT


By Christine Jenkins
    (Bloomberg) -- Nomura strategsit Siobhan Morden recommends
a "more bullish opportunistic near term investment strategy" in
Venezuela, citing support from oil prices and possibility of a
positive event risk from regime change; sees majority of
investors "aggressively neutral" due to high current yields and
political risks.
* Reiterates preference for longer end of the PDVSA curve on the
regime change/recovery value investment strategy and on the
front end continues to prefer the PDVSA 2020 versus the 2017 on
a no default view this year; assumes a worst case recovery value
of 50 cents on the dollar citing willingness to pay
* Support from oil prices should reaffirm a muddling through
scenario
* Sees "tense few weeks" through July 30 inflection point of the
political crisis 
* “The political outcomes are either formalized autocracy or
democracy with nothing in between satisfying the opposition’s
demands to liberate political prisoners and allow for
free/transparent presidential elections”
* In worst case scenarios, while regime change may be delayed
into next year, pressure from U.S. sanctions as well as an
eventual hard default would undermine the cashflow and political
support for the Maduro administration that would eventually
force a political transition