Venezuela Bondholder Group Sends Envoy to Caracas for Debt Talks




  • In Business
  • 2019-01-11 18:42:43Z
  • By Bloomberg
 

(Bloomberg) -- Creditors holding defaulted debt issued by Venezuela and its state-run oil company sent an envoy to Caracas for talks with the government's legal advisers, according to two people familiar with the matter.

A small U.S. delegation from a group of bondholders advised by Cleary Gottlieb Steen & Hamilton and Guggenheim Securities met with lawyers from Dentons, the firm representing Venezuela, and local creditors to discuss options for getting paid back after the nation defaulted on some $9 billion in debt payments, said the people, who asked not to be identified because the information was private. The group includes large investors such as T. Rowe Price Group Inc. and Fidelity Investments.

Among the topics on the table: a possible deal that would involve a so-called value recovery instrument in which bond investors could get compensated through royalties paid to operate oilfields in the nation. Another scenario under discussion was an accord under which creditors would help finance Petroleos de Venezuela's oil drilling ventures with U.S. companies such as Erepla Services LLC in return for a chunk of the revenue.

A representative of the bondholder group declined to comment, as did officials at PDVSA and the oil ministry. The government's benchmark notes due in 2027 gained for a fifth straight day, but have been locked in a range between 22 cents and 32 cents on the dollar over the past year.

It's a long-shot that the bondholders' efforts will result in any near-term resolution, absent a political transition in Caracas. Sanctions prevent U.S. investors and banks from participating in a traditional debt restructuring with Venezuela, and Erepla would need a license to work in the country from the Treasury Department's Office of Foreign Assets Control. A revenue-sharing deal may also meet resistance within Venezuela, where much of the population has long been leery of handing over control of the oil industry to foreigners.

Venezuelan officials have expressed interest in working out some kind of deal, provided that creditors agree to future financing for the cash-starved state oil company, according to one of the people. That also would require an exemption from OFAC, as sanctions introduced after Nicolas Maduro's election in May prohibit U.S. citizens from being involved in the sale or transfer of equity interest in an entity owned at least 50 percent by the government.

It's unlikely that the Trump administration would give a waiver.

"Anything that makes life easier for Maduro is a non-starter," said Francisco Rodriguez, the chief economist at Torino Capital in New York.

(Adds bond prices in fourth paragraph.)

--With assistance from Fabiola Zerpa.

To contact the reporter on this story: Ben Bartenstein in New York at bbartenstei3@bloomberg.net

To contact the editors responsible for this story: Rita Nazareth at rnazareth@bloomberg.net, ;David Papadopoulos at papadopoulos@bloomberg.net, Brendan Walsh

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

COMMENTS

More Related News

Trump Pours Gas on GM's Already Smoldering Relations With UAW
Trump Pours Gas on GM's Already Smoldering Relations With UAW

In a series of tweets starting Saturday, Trump attacked both General Motors Co. and the UAW over the closing of a Chevrolet Cruze factory in Lordstown, Ohio. GM and the UAW each pushed back, but the two have otherwise been very much at odds entering bargaining over a new four-year labor contract.

Trump warns of tougher sanctions on Venezuela
Trump warns of tougher sanctions on Venezuela
  • World
  • 2019-03-20 03:45:53Z

CARACAS, Venezuela (AP) - U.S. President Donald Trump said Tuesday that the United States could impose harsher sanctions on Venezuela in its campaign to oust President Nicolas Maduro.

China Considers Excluding Boeing 737 Max From Trade Deal
China Considers Excluding Boeing 737 Max From Trade Deal

Boeing jets were featured on a draft list of American products China would buy to reduce its trade surplus with the U.S., the people said, asking not to be identified discussing private deliberations. Now, safety concerns are pushing China to examine whether to cut the 737 Max from the list altogether or replace it with other Boeing models after the crash of a plane operated by Ethiopian Airlines led to the aircraft being grounded worldwide, they said.

Is Elizabeth Warren Right About the Electoral College?
Is Elizabeth Warren Right About the Electoral College?

(Bloomberg Opinion) -- At a CNN town hall in Mississippi on Monday, Senator Elizabeth Warren called for an end to the Electoral College. She claimed that while small states like Mississippi are largely ignored under the current rules, a popular-vote system would ensure that all voters count. Is she right

Venezuela may divert U.S.-bound oil to Russia, says Jose generator back online
Venezuela may divert U.S.-bound oil to Russia, says Jose generator back online

Venezuela may divert oil originally bound for the United States to Russian oil company Rosneft or other destinations due to U.S. sanctions, Venezuelan oil minister and president of state-run oil company PDVSA Manuel Quevedo said on Monday. Speaking at a gathering of OPEC and other oil ministers in Baku

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.