Venezuela’s new finance minister offered a proposal to holders of defaulted bonds that she says will pave the way for an eventual restructuring.
Sep 15, 2020
Delcy Rodríguez, appointed to the post last week, said her government will waive a statute of limitations clause in some bonds’ prospectuses if creditors agree not to sue for non-payment or to not proceed with claims if a suit has already been filed. Reaching an agreement now will allow for a smoother restructuring in the future, Rodriguez said.
Some investors have disputed the limitations’ validity, and it isn’t clear what appeal the offer may hold. The country has defaulted on $60 billion of sovereign and corporate debt over the past three years amid an economic collapse and U.S. sanctions that limit negotiations with the government and forbid Venezuela from undertaking a restructuring that includes issuing new bonds.
But Rodriguez’s offer may carry some symbolic significance by indicating that President Nicolas Maduro’s administration still wants to reach an accord with bondholders. It had been months since top officials had even mentioned the arrears, and most of the debt now trades at just pennies on the dollar.
The idea “does not make much sense within the framework of U.S. sanctions,” said Asdrubal Oliveros, a director at the Caracas-based research firm Ecoanalitica. “Under Venezuela’s current conditions, with a 75% drop in its dollar revenue this year, the country will hardly have the ability to enter a cycle of debt restructuring.”
The ultimate motive may be trying to get U.S. investors to push the Trump administration to loosen the sanctions that have crippled Venezuela and left it locked out of mainstream financial markets, according to Ray Zucaro of RVX Asset Management LLC in Miami, which owns the bonds.
Read More: Bloomberg – Venezuela reaches out to Bondholders after months of silence