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A DEFAULT "NO"

Something more cunning than the Argentines, instead of declaring a "default", Nicolás Maduro announced a debt restructuring and began to default on payments from November 2017 without progressing a little since. The excuse was that US sanctions against the regime had prevented it from meeting its commitments due to the blockade of international clearing houses (however, on April 27, Euroclear and Cleearstream agreed to pay the $ 1,057 USD PDVS 2020 coupon. , demonstrating the lie of the argument). This is how Maduro was able to limit the action of creditors: the most complicated bet was that the situation would normalize at one point, while the bravest ones feared to enter a proceeding Berenjenal judiciary where, as long as Maduro remained in power, bigger did not recover anything. Despite this, on December 6, five investment funds holding $ 1,500 million in VENZ 34 were presented to the Bank of New York Mellon, demanding accelerated payment of the bond after the 2018 coupon breach. by $ 140 million (followed by other claims, Venezuelan debt acceleration processes require the agreement of at least 25% of the bond creditors of each series). For the middle of the month, Casa Express Corp, a group that had only US $ 34 million in VENZ 18, made its first presentation in the Southern District Court in New York. In addition, there are at least two other groups (one led by investment bank Houlihan Lokey) that will appear in court in the near term (in November, the ELECAR credit committee 18 had a budget of 677 million US dollars, they have not yet submitted a specific request). The latest and perhaps most important novelty is perhaps the approach of the Venezuelan Creditors Committee which would maintain a debt of 8,000 million US dollars. Cleray Gottlieb's study was aimed at putting an end to the actions of "real debtors" who would eventually leave them if they had to claim.

In April of last year and with the favorable decision of an international arbitration tribunal, the oil company Conoco Phillips outperformed the financial creditors by seizing the badets of PDVSA in the Caribbean for US $ 2 billion (in 2007, Hugo Chavez nationalized his badets). in Venezuela). The crisis that triggered by banning the refining or export of crude oil made in August, Maduro agreed to pay them $ 500 million for a period of four and a half years (in a few hours a new deadline) in exchange for the lifting of embargoes. The badets were released, but Conoco had all the necessary tools to re-embark at the least disadvantage and even advance on the jewel of the Venezuelan crown: CITGO (with a market value of more than 8,000 million US dollars, several refineries and nearly 6,000 stations). service is the largest chain and the gateway to Venezuelan oil to the United States). In August, the Canadian mining company Crystallex was able to seize a federal judge by CITGO from PDVSA, which makes it seizable (Conoco is still waiting for another decision in its favor, that of the World Bank arbitration tribunal for an estimated compensation to be even higher than in April, while the decision in favor of Rusoro could be known in a few months)

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A DEFAULT "YES"

Venezuela has 14 sovereign bonds, 8 of PDVSA and one of Elecar (Electricidad de Caracas) currently in default. The only exception is the PDVSA 2020 that was quoted Friday at 95.095% and of which 1.7 billion dollars is pending and is supported by 50.1% of CITGO shares – the rest being pbaded in Russian hands as collateral / payment for various loans. This last explains the interest of Maduro that this title does not fall, because last October, it had done "good" 949 dollars and that it would respect this year the 985 million dollars which it had to pay.

As we have seen in the case of Argentina, resorting to judicialization to obtain the collection is not easy nor cheap and the process would take no less than two years. So, in the best case, the key is the degree of recognition / payment of the debt that the opposition is ready to make. But here it is important to understand that we are not talking about a country like ours in 2001, but of a devastated country, where priority will be given to the humanitarian situation, to food, to health and to security, and finally the payment of the debt and the new. Infrastructure This is where the performance of the IMF -Lagarde would give priority to Caracas in Buenos Aires- and that US Treasury loans, bypbading the market, would be crucial.

Between Venezuela as a country and its main company, Petróleos de Venezuela SA (PDVSA) and Elecar have a debt of more than 65 billion USD (of which 86% of public debt – total debt represents more than 150% of GDP), with arrears of US $ 8,869 million. ($ 5,078 for 2018 maturities), which would add $ 8,975 this year (October is the highest rate with VENZ 19 and amortization of PDVSA 202) and the largest creditors are Goldman Sachs, the Ashmore Group, Black Rock, Prince T. Rowe, Northertn Trust, and then a series of hedge funds.

"OBLIGATIONS OF HUNGER"

In May 2017, three months before President Trump prevented US companies and citizens from buying any new Venezuelan debt (taking Venezuela out of the international financial market), the residents of Goldman Sachs acquired bonds for $ 2.8 billion. PDVSA 2022 at 12.3 / 4 paying less than 31 cents US ($ 865 million) per dollar. The operation was severely criticized by the rest of the financial institution (from there, Credit Suisse and other houses refused to run Venezuelan newspapers), as this meant clear support for a dictatorship that was starving population. In April of last year and with much of the outstanding debt, the oil company paid out $ 90 million in interest, an amount that would have been better intended for the purchase of Food and medicine for Venezuelans and the market started using the term "hunger links" (hunger links) which today serves as a reference to all Venezuelan newspapers. You may think that the Goldman people have "whistled Catalan" to the rest of the system, but the truth is that with the political change and the statements of the opposition, if they came to power, these particular titles would not be honored and Goldman would be excluded. any possible new deal with the country, plus the spot on the reputation of the company, casts doubt on the success of the operation. Ah !, These stocks were quoted Friday at 28.69% and among the most liquid (if you can apply this concept to the Venezuelan debt) are those who have increased the least with the rally last week.

THE RALLY

If you have survived the absurdities of our country … why not survive the Venezuelans? Thus, the market of "obligations of hunger", with their dreams of astronomical profits, is particularly attractive for any investor in Argentina, among those who saw last year nearly half of their savings destroyed. But here we have several problems. The first is illiquidity, in part because of restrictions imposed by the United States. and partly because those who bought hoping that Maduro lost the elections in 2017 or the announcement of the renegotiation of the debt continue to lose money and prefer to stay on their holdings pending (at the beginning of this year , the discouragement was such that the debt traded between 10 and 20 cents per dollar, you already had some titles in the 30s (September 2017 levels) .The second is the time for things to really improve: nobody excludes us from seeing a situation similar to that of Libya in 2011, while several months elapsed between the popular uprising and the fall of Muammar Gaddafi, to which we add the legal time we comment

Here is an almost political comment: it is true that Maduro has the physical power in the country, but Juan Guaidó would have "the money" if Trump decided to unblock the frozen badets of Venezuela in the United States, to give him control of CITGO , the Caribbean holdings and finally decree the oil embargo on Venezuela.

The rally that Venezuelan debt had these days was important (the most important since last October), but nothing extraordinary so far for such illiquid roles (the rulers came a little better than the PDVSA papers). It went from something like $ 0.20 to $ 0.24 / $ 0.39. At best, the expectations – with the change of government, the "honeymoon" and the restrictions imposed by Trump – are in the range of 0.40 USD / 0.50 USD by the end of the year. l & # 39; year. Faced with this, in the worst case – Ganano or Maduro – we are talking about returning to the $ 0.20 zone.

In this context, the market seems to prefer waiting – at the risk of losing a little or stopping to win – and seeing what happens, and not following Rotschild's advice. Well.