World ON BRINK: Venezuela defaults on $60BILLION debt and threatens new financial crisis

Tuesday, November 14, 2017
By Paul Martin

VENEZUELA has defaulted on its $60 billion after failing to make payments due on bonds, ratings agency Standard & Poor’s has declared.
Tue, Nov 14, 2017

The agency is downgrading Venezuela’s sovereign debt grade to “selective default”.

It means Caracas skipped a specific bond payment but remains committed to paying off its international debts.

And in a further blow to President Nicolas Maduro’s debt-ridden socialist government S&P said: “There is a one-in-two chance that Venezuela could default again within the next three months.”

The ratings agency said the nation failed to make $200 million in coupon payments within the allowed 30-day grace period for bonds due 2019 and 2024.

S&P said Venezuela could again miss a payment on its outstanding debt obligations or advance a distressed debt exchange operation, equivalent to default, within the next three months.

Venezuelan sovereign debt was mainly a touch firmer but some PDVSA bonds fell further, with the 2035 bond down 1.2 cents, the 2027 bond down 1.4 cents and the 2021 issue down 1.5 cents.

Industry body ISDA said it would reconvene on Tuesday to discuss whether PDVSA had triggered a credit default event through a late payment of its 2017N bonds.

It comes after Venezuela gave creditors chocolates instead of firm proposals in a desperate ploy as the country teeters on the edge of financial collapse.

Yesterday the socialist government offered the sweet treats during a brief meeting in Caracas but left investors without a clear understanding of the government’s strategy to renegotiate $60 billion in debt.

President Maduro confused investors this month with a vow to continue paying Venezuela’s crippling debt, while also seeking to restructure and refinance it.

Monday’s short and confused meeting, attended by senior Venezuelan officials blacklisted by the United States, gave no clarity on how Mr Maduro would carry out his plan, bondholders and their representatives who participated said afterwards.

One bondholder, leaving the meeting that lasted a little over half an hour at the ‘White Palace’, departing with a colourful gift-bag containing Venezuelan chocolates and coffee, said: “There was no offer, no terms, no strategy, nothing.”

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