19 hours ago
2079
A group of big-name investment firms says they’re prepared to start negotiating Venezuela’s defaulted government bonds worth $60 billion, setting the stage for what could be one of the largest sovereign debt workouts in recent decades.
The Venezuela Creditor Committee, which includes Fidelity Management & Research Company LLC, Morgan Stanley Investment Management, and Greylock Capital Management, put out a statement Friday saying they’re ready to negotiate once they get authorization.
According to the group, a successful debt restructuring would “accelerate financing across all sectors of the Venezuelan economy” as reported by Bloomberg.
This comes as relations between Caracas and Washington have started to thaw following a US military operation that ousted President Nicolas Maduro. Acting leader Delcy Rodriguez has indicated she’s willing to work with the Trump administration to ramp up oil production and stabilize the economy.
The political shake-up sparked a rally in Venezuelan bonds, which have been in default since 2017. Government notes due in 2027 jumped more than 10 cents this week — the largest weekly gain since 2023. Debt from state oil company Petroleos de Venezuela SA, or PDVSA, also moved higher. The recent surge in Venezuelan bonds has attracted attention from ETF managers and distressed debt investors.
Bondholders are optimistic that negotiations could happen as soon as this year, but timing depends heavily on politics. Venezuela remains under US economic sanctions that prevent it from accessing capital markets, which is critical for any restructuring. Questions also loom over the oil industry’s future, since revenue from oil will determine the nation’s ability to repay its debts.
$170 Billion Debt Mountain
When you factor in Venezuela’s past-due interest on bonds, loans and other obligations, total debt is estimated at as much as $170 billion. That would make this one of the biggest restructurings in decades.
The creditor committee met Monday to discuss developments in Venezuela, according to people familiar with the matter. Some members agreed that Maduro’s removal speeds up the timeline for a potential restructuring.
One proposal the committee is considering would combine Venezuela’s sovereign and PDVSA debt into a single restructuring. That would give the country a single baseline for pricing its debt and make the process easier to understand, one person said.
The group formed around eight years ago, after Venezuela started defaulting on its financial debt following a first round of US sanctions. It’s represented by Thomas Laryea of Orrick, Herrington & Sutcliffe LLP, and also includes Grantham Mayo Van Otterloo & Co, Fidera, HBK Capital Management, Mangart Capital, T. Rowe Price Associates, and VR Advisory Services Ltd.
US Banks Eye Venezuela Opportunities
US involvement in Venezuela’s oil sector offers potential opportunities for international banks. JPMorgan Chase appears well-positioned due to its history in the country and past involvement with international trade financing.
Several banks including JPMorgan and Citigroup historically operated in Venezuela but reduced operations or pulled out over the last few decades. US banks now may have opportunities in trade financing or financing investment in oil infrastructure, one source familiar with the situation said. There would still be significant challenges to doing business, even with Venezuela under an interim government.
JPMorgan could have an edge in the country, where it’s had a presence for 60 years. While JPM curtailed its banking and stock trading operation in 2002, it kept a dormant office in Caracas for many years, according to a second source. It could be reactivated as needed.
The Department of Energy said Wednesday that proceeds from oil would settle in US-controlled accounts at global banks. ConocoPhillips CEO Ryan Lance said Friday at a White House meeting that US banks including the Export-Import Bank may need to be involved in financing Venezuela oil investments.
For JPMorgan, there could be several avenues for involvement. One idea floated within the bank was creating a trade bank to finance oil exports, a third source said, without specifying if official discussions were taking place. The bank has a strong presence in oil-producing regions such as the Middle East and Africa. It has historical precedence here, it led the consortium of banks that operated Trade Bank of Iraq, set up in 2003 after the US-led invasion.
JPMorgan could also use funds from its Security and Resiliency Initiative, a $1.5 trillion 10-year plan unveiled last year to finance areas such as critical minerals, where Venezuela has deep resources, the second source said.
Currently, the bank trades Venezuelan sovereign bonds that aren’t under sanctions with offshore counterparties, the source said.
Separately, an industry source said there could be opportunities for restructuring, financing deals and within energy that banks would be interested in.
White House Remains Cautious
A White House official said President Trump’s administration is carefully evaluating all options, prioritizing the best interests of the American people. Any announcement will come directly from the administration; anything else is purely speculation.
US banks have done business in Latin America for decades, but the share of revenue from the region is small. In 2024, JPMorgan Chase’s share of the Latin America/Caribbean region accounted for 2.19% of its global revenue.
But while Venezuela has only 0.1% share of global GDP, it has broader importance.
“Venezuela … is a country with huge geopolitical and economic significance,” Deutsche Bank economists said in a note published Jan. 5, citing oil reserves.
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