If a deal looks too good to be true, it may just be. Money
managers at Goldman Sachs bought $2.8 billion face value of Petroleos de
Venezuela bonds at a deep discount last week, attracting the ire of critics of
President Nicolás Maduro. Investments aren’t necessarily moral choices, but
they can hit reputations. Venezuela could, on paper, be one of the soundest
emerging-market credits, given that it has the world’s largest oil and gas
reserves. But the economy has been in precipitous decline since Mr. Maduro
succeeded Hugo Chávez in 2013. Output has fallen by nearly a third over the
past three years, and inflation is projected to exceed 1,000 percent by the end
of this year, according to the International Monetary Fund. Bare shelves and
angry protests met with violence have become the norm. More…
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