Venezuela Arbitration Awards Threaten Sovereign Debt Default (Bloomberg Intelligence) -- BlackRock, Fidelity and other holders of Venezuela's sovereign debt may be able to take advantage of unpaid arbitration awards against the country to declare its notes immediately due. Investors in notes issued by Petroleos de Venezuela SA may not be able to do the same, even though PDVSA is wholly owned by Venezuela. (09/14/17)

Venezuela Sovereign Debt Default Negisa Balluku BI Litigation Analyst Venezuela Arbitration Awards Threaten Sovereign Debt Default (Bloomberg Intelligence) -- BlackRock, Fidelity and other holders of Venezuela's sovereign debt may be able to take advantage of unpaid arbitration awards against the country to declare its notes immediately due. Investors in notes issued by Petroleos de Venezuela SA may not be able to do the same, even though PDVSA is wholly owned by Venezuela. (09/14/17) 1. Crystallex Award May Cause Venezuela Default Absent Appeal Statement Venezuela's failure to pay hundreds of millions of dollars in arbitration awards to Crystallex, Exxon Mobil and others may result in Venezuela's outstanding bonds becoming due and payable if Venezuela loses its appeal. Final judgments in excess of $100 million against Venezuela are an event of default if not satisfied or stayed within 30 days. Holders of 25% or more of each bond issuance may demand immediate repayment of principal and interest in full upon an event of default. Current holders of sovereign debt issued by Venezuela include BlackRock, Fidelity, Legal & General Group and Ashmore. (09/14/17) 2. BlackRock Can't Yet Rely on Venezuelan Awards for Debt RepaymentReturn to Top BlackRock, Fidelity and other holders of Venezuelan notes can't yet rely on arbitration awards against Venezuela to force early repayment of their notes. This is because Venezuela is appealing the court decision confirming Crystallex's $1.2 billion arbitration award, and other arbitration awards haven't yet been converted into judgments. If, however, the arbitration awards become final judgments and Venezuela exhausts its appeal rights, noteholders may force early repayment of their notes. Federal courts are required to enforce arbitration awards against Venezuela as final judgments, and the outstanding judgments thus far exceed the $100 million threshold. Venezuela has an opportunity to appeal the judgments. (09/14/17) 3. Oil & Gas, Mining Arbitration Awards Against Venezuela Maturingp Contributing Analysts Brandon Barnes (Litigation) Venezuela faces a maturing class of arbitration cases, meaning that awards could be coming due soon. Exxon Mobil's $256 million arbitration award is in the final stage of proceedings, with a New York court case pending to attach the award on Venezuela's U.S. assets, such as Citgo. That case will likely play out through 2H. Owens-Illinois won a $455 million award that trails behind, but not by much. Other companies in various stages of arbitration include Anglo American and ConocoPhillips. (09/14/17) 4. UBS, Other PDVSA Noteholders Likely Can't Declare Their Debt DueR Holders of debt issued by Petroleos de Venezuela SA, the state-owned oil company, will likely be unable to declare their debt due, despite significant arbitration awards against Venezuela. Unlike Venezuela's bonds, the PDVSA bonds don't fall into default if judgments are issued against Venezuela. While plaintiffs such as Crystallex are looking to PDVSA and its subsidiaries to satisfy Venezuelan arbitration awards, the judgments are technically against the country, not PDVSA. Current holders of debt issued by PDVSA include BlackRock, T. Rowe Price, Nordea Bank, JPMorgan and UBS. (09/14/17) 5. Trump May Prompt Sovereign Debt Default With Venezuela Order President Donald Trump's Aug. 25 executive order banning U.S. investors from buying and selling bonds issued by Venezuela may tempt current noteholders to cause Venezuela to default on its debt. Unable to trade, noteholders could rely on Venezuela's failure to pay the arbitration awards to declare the debt due and payable even if Venezuela has fulfilled its payment obligations and no other event of default exists under the debt documents. A complicated and unprecedented restructuring process would follow. (09/14/17)