Having said that, while no official default has been officially announced (Maduro used "renegotiate" and "restructure") and no interest or bond payments have hit an official "event of default", the Emerging Markets Trading Association (EMTA) has decided that bonds will now trade without interest, with all rights to interest passing to the buyer. "Trades will settle at an all-in (or ”dirty”) price and without an additional payment in respect of accrued interest and (2) Buyers will be entitled to all unpaid and accrued interest and related claims as of the trade date (both for the current interest period and for any previous interest period that is unpaid as of the trade date)."

First let me say that while our models have been pointing to this default as inevitable, it is incredibly sad to finally arrive at this devastating point.  So much needless death and destruction from starvation, malnourishment, and lack of even basic medicine by an utterly contemptible and incompetent regime which has destroyed this amazing country and its phenomenal economy and still refuses to quit and leave democratically.

Having said that, while no official default has been officially announced (Maduro used "renegotiate" and "restructure") and no interest or bond payments have hit an official "event of default", the Emerging Markets Trading Association (EMTA) has decided that bonds will now trade without interest, with all rights to interest passing to the buyer.  

"Trades will settle at an all-in (or ”dirty”) price and without an additional payment in respect of accrued interest and (2) Buyers will be entitled to all unpaid and accrued interest and related claims as of the trade date (both for the current interest period and for any previous interest period that is unpaid as of the trade date)."

In the meantime, clients who followed our immediate call to buy Venezuela CDS yesterday, just made their year (from our research report "Has a Failure to Pay Event Occurred").

We will have a great deal more to say and explain about things and the Council of the Americas may be organizing a conference call for later today, so watch this space.

In the meantime, all hands are on deck in Caracas and Montevideo and here are the prices the desks are making.

Security	B Px		A Px	B YTC		A YTC	B Spd		A Spd	Fitch	Moody	S&P	Amt Out
VENZ   13⅝  18	45.00	-	48.00	159.649	/	144.887	15803	/	14327	CC	Caa3	CCC-	752.811MM
VENZ   7     18	40.00	-	43.00	121.085	/	110.114	11947	/	10850	CC	Caa3	CCC-	1MMM
VENZ   7¾   19	29.00	-	32.00	93.556	/	85.377	9194	/	8376	CC	Caa3	CCC-	2.496MMM
VENZ   6     20	28.00	-	31.00	59.531	/	54.556	5780	/	5282	CC	Caa3	CCC-	1.5MMM
VENZ   12¾  22	29.00	-	32.00	66.768	/	61.341	6476	/	5933	CC	Caa3	CCC-	3MMM
VENZ   9     23	27.00	-	30.00	47.112	/	43.252	4511	/	4125	CC	Caa3	CCC-	2MMM
VENZ   8¼   24	26.00	-	29.00	41.120	/	37.666	3877	/	3531	CC	Caa3	CCC-	2.496MMM
VENZ   7.65  25	23.00	-	26.00	41.933	/	38.086	3958	/	3574	CC	Caa3	CCC-	1.6MMM
VENZ   11¾  26	29.00	-	32.00	43.653	/	40.032	4130	/	3768	CC	Caa3	CCC-	3MMM
VENZ   9¼   27	27.00	-	30.00	37.656	/	34.416	3531	/	3207	CC	Caa3	CCC-	4MMM
VENZ   9¼   28	25.50	-	28.50	39.037	/	35.444	3668	/	3309	CC	Caa3	CCC-	2MMM
VENZ   11.95 31	29.00	-	32.00	41.852	/	38.179	3950	/	3583	CC	Caa3	CCC-	4.2MMM
VENZ   9⅜   34	24.00	-	27.00	39.277	/	35.115	3645	/	3229	CC	Caa3	CCC-	1.5MMM
VENZ   7     38	23.00	-	26.00	30.686	/	27.307	2786	/	2448	CC	Caa3	CCC-	1.25MMM
PDVSA  8½   20	65.00	-	68.00	35.807	/	32.656	3419	/	3104	CC	Caa3	CCC- /*-	2.526MMM
PDVSA  9     21	27.00	-	30.00	73.907	/	67.340	7218	/	6561	CC	N.A.	CCC- /*-	2.394MMM
PDVSA  12¾  22	26.00	-	30.00	80.990	/	71.701	7898	/	6997	CC	N.A.	N.A.	3MMM
PDVSA  6     24	23.00	-	26.00	45.050	/	41.005	4270	/	3900	CC	N.A.	CCC- /*-	5MMM
PDVSA  6     26	23.00	-	26.00	35.674	/	32.455	3332	/	3010	CC	N.A.	CCC- /*-	4.5MMM
PDVSA  5⅜   27	22.00	-	25.00	31.820	/	28.865	2947	/	2651	CC	N.A.	CCC- /*-	3MMM
PDVSA  9¾   35	26.50	-	29.50	37.146	/	33.524	3432	/	3070	CC	Caa3	N.A.	3MMM
PDVSA  5½   37	22.00	-	25.00	25.803	/	23.002	2297	/	2018	CC	N.A.	CCC- /*-	1.5MMM
------
ELECAR 8½   18	20.00	-	40.00	953.290	/	368.321	95167	/	36670	CC	N.A.	CCC-	650MM

Maduro Moves to Restructure Venezuela's $120B Foreign Debt
2017-11-03 04:14:37.463 GMT


By JORGE RUEDA and JOSHUA GOODMAN

Caracas, Venezuela (AP) -- Venezuela's president says his
socialist government will begin restructuring a foreign debt
estimated at more than $120 billion, saying U.S. financial
sanctions are crippling the oil-dependent economy's ability to
pay.

But President Nicolas Maduro also indicated he wanted to
avoid a fight with international lenders. He ordered state-run
oil company PDVSA to make one last $1.1 billion bond payment in
full on Friday before the country launches its effort to ease
future foreign payments.

"I decree a refinancing and a restructuring of all external
debt and all of Venezuela's payments," Maduro said in a
nationally broadcast address Thursday.

Venezuela's economy has contracted more than 35 percent
since 2014, a sharper fall than the U.S. suffered during the
Great Depression, and Maduro's government has found itself
forced to choose between paying foreign creditors and helping a
population ravaged by triple-digit inflation and widespread food
and medicine shortages.

Until now, Venezuela has gone out of its way to honor its
debts, finding new funds from ally Russia and disproving critics
who long predicted a default. But financial sanctions announced
in August by the Trump administration banning U.S. investors
from lending new funds to Venezuela has made it harder to
maintain the delicate balance.

Many banks and financial institutions now refuse to handle
the government's payments, for fear it could damage their
reputations. In May, Goldman Sachs experienced a major backlash
after it made a big purchase of so-called "hunger bonds" from
Venezuela that paid a huge return but opened it up to
accusations it was profiting from Venezuela's misery.

"We have had to face a real global financial persecution,"
Maduro said.

The president said Venezuela has paid $72 billion to debt
holders since he came to power in 2013 despite a precipitous
fall in oil income for the OPEC nation.

Under the late President Hugo Chavez, the government went
on a borrowing binge as oil prices that were around just $10 a
barrel when he took office in 1999 soared to over $140, giving
investors confidence they would be paid back from the nation
sitting atop the world's largest oil reserves.

But as oil prices have fallen, the few risk-seeking
investors willing to keep lending to Venezuela have been
demanding astronomically high interest rates.
The country now has more than $120 billion in external
debt, about half of which is in the form of dollar-denominated
bonds, according to brokerage Caracas Capital.

To lead the debt renegotiation process Maduro named Vice
President Tareck El Aissami, who faces U.S. sanctions of his own
over allegations of being a major drug trafficker. He has
dismissed the accusations as baseless and an attempt to
undermine Maduro's rule.

Members of the opposition, who for months have criticized
Maduro for prioritizing debt payments, nonetheless slammed his
proposal to reverse course.

"Maduro can't restructure the debt because nobody in the
world trusts his government," said National Assembly President
Julio Borges, who previously letters to Wall Street banks urging
them to cut off the government over human rights abuses
committed during months of protests.
___
Associated Press writer Jorge Rueda reported this story in
Caracas and AP writer Joshua Goodman reported from Bogota,
Colombia. AP writer Scott Smith in Caracas contributed to this
report.