Venezuela & Debt: Will Democracy Prevail?

As the opposition in Venezuela pursues democratic processes for pushing out President Nicolas Maduro, political risk is rising. With an eye on this week’s deadline for a government debt exchange, designed to push obligations into the future as cash runs out, here’s the latest from Siobhan Morden, head of Latin America fixed income strategy at Nomura Securities: “There has been so much focus on the potentially successful PdVSA [Petroleos de Venezuela] debt exchange, that there has been less focus on the political risk with an increasingly autocratic bias necessary to reinforce the carry trade. The administrative barriers for the second phase of the recall referendum are so high that the question is not whether the recall referendum happens this year but rather whether the recall referendum happens at all. More…