Market fears Venezuela’s socialist regime could default

One of the hardest questions foreign investors have to get their heads round is the following: Is Venezuela about to default? On the face of it, the question is absurd. Venezuela has the largest oil reserves in the world, according to BP, and its debt metrics do not suggest financial distress. For example, gross debt is less than half the country’s $209bn annual economic output. Yet Venezuelan sovereign debt is among the highest yielding in the world, at more than 18 per cent, and the D-word is increasingly on investors’ lips – not that this has stopped some from buying Venezuelan bonds. More…