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Venezuela bondholders inch toward showdown

Wednesday, June 14, 2017

Venezuela Defaults On Russia; Is Goldman Sachs Next?

Venezuela defaulted on part of its $2.5 billion loan from Russia's state-controlled oil company Rosneft once again, giving Wall Street bond lords cause for concern that a default on PDVSA oil bonds is right around the corner. PDVSA is a quasi-sovereign and is the government's only remaining cash cow. The government owed Rosneft a reported $950 million. News of the missed payment sent Venezuela’s $3 billion government bond due 2022 to trade at around 57 cents, for an annualized yield of 29.3% for those lucky (or unlucky) enough to be buyers at those levels. Assuming the par value of the bond was $100, that means the bond is now worth $57. Some bondholders in London immediately questioned whether or not the missed Russia payment constituted a default, the Financial Times reported. The International Swaps and Derivatives Association said it did not. More…

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