Venezuela's complex and contested debt puzzle
Live Events as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You
Live Events as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The scale of Venezuela's debt burden - and the mix of creditors holding it - will help determine the losses investors face in what could be one of the largest sovereign debt restructurings in history.Venezuela has not published comprehensive debt statistics in years, and 2017 sanctions largely isolated it from the Western financial world. Caracas had previously said it aimed to complete a full debt assessment by the end of June. On Monday, government economic adviser Calixto Ortega said the government would present a debt sustainability analysis "in the coming weeks," while incorporating the economic impact of last month's earthquakes into its restructuring framework.It remains unclear whether any detailed assessment will be shared more broadly. Most analysts estimated debts of $150 billion to $200 billion, but the Financial Times reported Venezuela was set to unveil a larger-than-expected debt pile of $240 billion.Here are some details on what we know - and don't know - about Venezuela's debt stock:Venezuela said in May it intends to restructure outstanding external commercial Eurobond debt issued by the government and state oil company Petroleos de Venezuela, or PDVSA.These total about $60 billion in face value, but have also been accruing interest since the 2017 default.
JPMorgan calculates total bond claims, including past-due interest, at $102 billion.Different terms could complicate a deal.A 2020 PDVSA bond is backed by a majority stake in U.S. refiner Citgo. Some older bonds are more vulnerable to holdout litigation.There is also a $650 million electricity-sector bond issued by Electricidad de Caracas, known as Elecar.Venezuela's total bilateral lending accounts for roughly $25 billion, based on reports.Bilateral creditors are often first to restructure. The Paris Club - a group of 22 official creditor nations - usually helps set the benchmark for debt relief expected from other creditors.Venezuela owes Paris Club members $8.69 billion.Russia alone extended at least two loans over the past 15 years, including $3.2 billion restructured in 2017, according to AidData. Venezuela also owes China a substantial amount through oil-backed loans that could give Beijing an edge over other creditors. JPMorgan estimates those obligations at $13 billion to $15 billion. Beijing condemned the redirection of Venezuelan oil exports in early January, and said "legitimate rights and interests of China and other countries in Venezuela must be protected".Venezuela has been vague about plans for official debt, saying that would be addressed through "institutional normalization" without detailing the process or whether this would involve a formal restructuring.The country owes about $4 billion to multilateral development banks, according to Fitch, chiefly to Caracas-headquartered CAF Development Bank of Latin America and the Caribbean and the Inter-American Development Bank (IDB).Such institutions typically enjoy preferred creditor status and are not expected to take losses in a restructuring.More than 50 companies have pursued claims against Venezuela and PDVSA following expropriations under former President Hugo Chavez.
The BriefWire