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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