How Will Venezuela Deal With A PDVSA Default?

While debt servicing has been a government priority, declining external liquidity and a deteriorating domestic situation (three-digit hyperinflation, shortages, and a political crisis between the government and the National Assembly) make it a daunting task. By 2020, the country must repay 30 percent of the external debt due to expire in the next 23 years. The first option is to borrow directly on the financial market which implies that the country must pay an increasingly prohibitive risk premium due to investors’ fear of sovereign default. The second option, used intensively in recent years, is to borrow from allies, and especially China. More…