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Venezuela bondholders inch toward showdown

Monday, June 12, 2017

Venezuela’s Risky Bonds Draw Investors, and Protests

Venezuelan bonds would seem to be an unlikely target for global investors. The country is in near revolt and has barely enough cash to feed its people. Yet bonds issued by Venezuela’s national oil company, Petróleos de Venezuela, or Pdvsa, have attracted some of the world’s most sophisticated investors. They are betting that the government will use its dwindling dollars to pay bondholders instead of importing food and medicine. Now, Goldman Sachs’ decision to snap up $2.8 billion worth of Pdvsa bonds maturing in 2022, at a 70% discount to the market price, has struck a nerve. The investment has caused a political uproar in Venezuela, where opposition forces have taken to the streets to protest the autocratic rule of the nation’s unpopular president, Nicolás Maduro. Nearly 60 people have died in clashes, mainly between protesters and the police, in recent months. More…

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