The result is that any future debt
negotiations will include Venezuelans ranging from high-net-worth individuals
to humble retirees and college professors. Many may be unwilling to accept the
major losses implied by the restructuring that the country’s President Nicolas
Maduro proposed last month, sending debt prices plunging. The government could
face intense lobbying from Venezuelan businesses and wealthy individuals as
well as ballot-box-pressure from middle-class bondholders to protect their
investments. But without a large “haircut” to reduce the debt service Venezuela
has to pay, the country will likely struggle to bring its economy out of
recession. “Venezuelan bond investors range from taxi drivers to large
companies, and everything in the middle,” said Victor Silva of local brokerage
Kapital, which has intermediated the sale of paper issued by Venezuela and
state oil company PDVSA. More…
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