NO HEAD­WAY IN VENEZUELA DEBT TALKS

Oman Daily Observer - - FRONT PAGE - MARIA IS­ABEL SANCHEZ

Venezuela hosted a brief meet­ing of cred­i­tors as the strug­gling yet oil-rich coun­try sought to stave off a de­fault seen as in­evitable by ex­perts, while the EU stepped up the pres­sure with new sanc­tions on Cara­cas. How­ever, the 25-minute closed-door gath­er­ing in a gov­ern­ment build­ing across from the pres­i­den­tial palace ended with no agree­ment and no plan broached, sev­eral par­tic­i­pants said.

An­other meet­ing was promised, but no date was given.

Vice-Pres­i­dent Tareck El Ais­sami chaired the meet­ing, dur­ing which he read a state­ment blam­ing US sanc­tions for de­lays to Venezuela’s debt re­pay­ments.

His pres­ence was prob­lem­atic for some, as the US has des­ig­nated him a drug king­pin with whom US en­ti­ties are barred from deal­ing.

“They said they are go­ing to form work­ing groups to eval­u­ate short­and mid-term debt-rene­go­ti­a­tion pro­pos­als,” Geron­imo Man­sutti, from the Ren­di­val­ores bro­ker­age, said. “But they didn’t give any con­crete de­tails on their plans, on what they hope to get.” He said there had been around 300 in­vestors or their rep­re­sen­ta­tives at the meet­ing.

Venezue­lan au­thor­i­ties had said 414 cred­i­tors rep­re­sent­ing 91 per cent of its traded debt had re­sponded to Pres­i­dent Ni­co­las Maduro’s in­vi­ta­tion to at­tend.

Maduro said early this month he was seek­ing a re­fi­nanc­ing and re­struc­tur­ing of Venezuela’s debt, which is es­ti­mated at $150 bil­lion, in­clud­ing bonds is­sued by the gov­ern­ment and state oil com­pany PDVSA as well as di­rect loans from China and Rus­sia.

The coun­try has less than $10 bil­lion left in hard-cur­rency re­serves.

The fi­nan­cial news agency Bloomberg said that none of the for­eign in­vestors it had con­tacted last week planned to travel to Cara­cas.

About 70 per cent of Venezue­lan bond­hold­ers are North Amer­i­can, ac­cord­ing to gov­ern­ment fig­ures.

Ma­jor credit rat­ing agen­cies say that de­fault on Venezuela’s debt will hap­pen, though they don’t know pre­cisely when.

The coun­try has re­pay­ments of $1.4 bil­lion to make be­fore the end of the year, and an­other $8 bil­lion next year.

Venezue­lan econ­o­mist Luis Vi­cente Leon said Maduro called the cred­i­tors’ meet­ing to try to get them to pres­sure the US gov­ern­ment to al­low a re­struc­t­ing to go ahead, de­spite a ban on US en­ti­ties buy­ing new Venezue­lan debt.

A com­mit­tee of the In­ter­na­tional Swaps and De­riv­a­tives As­so­ci­a­tion (ISDA) is al­ready weigh­ing whether hold­ers of PDVSA debt with de­fault in­sur­ance — credit de­fault swaps — can col­lect pay­ment.

The Maduro gov­ern­ment had said it would make a $1.2 bil­lion pay­ment on a PDVSA bond on Novem­ber 2, but it was un­clear if the funds ever reached cred­i­tors.

The so-called De­ter­mi­na­tions Com­mit­tee for the Amer­i­cas, com­prised of 15 fi­nan­cial firms, met in New York fol­low­ing an ini­tial gath­er­ing, “to dis­cuss whether a Fail­ure to Pay Credit Event had oc­curred” with re­spect to PDVSA, ac­cord­ing to the ISDA.

It ended up de­cid­ing to again post­pone a de­ci­sion un­til Tues­day.

Tight­en­ing the squeeze on Maduro was the Euro­pean Union’s an­nounce­ment of sanc­tions, in­clud­ing an em­bargo on arms and equip­ment that could be used for po­lit­i­cal re­pres­sion.

Re­stric­tions in­clude a pro­hi­bi­tion on US en­ti­ties buy­ing any new Venezuela debt is­sues — usu­ally a re­quired step in any re­struc­tur­ing.

Maduro struck a de­fi­ant tone, in­sist­ing that his coun­try would “never” de­fault and point­ing to on­go­ing ne­go­ti­a­tions with China and Rus­sia. But his op­tions are very lim­ited. A de­fault can be de­clared in sev­eral ways: by the ma­jor rat­ings agen­cies, big debt-hold­ers or by the gov­ern­ment it­self.

News on Fri­day that a state-owned util­ity, Elec­t­ri­ci­dad de Venezuela, failed to make a $650 mil­lion pay­ment within a one-month grace pe­riod bol­stered cred­i­tors’ wari­ness that a de­fault was un­fold­ing.

— Reuters

Venezuela’s Vice-Pres­i­dent Tareck El Ais­sami (C) speaks dur­ing a meet­ing with bond­hold­ers and their rep­re­sen­ta­tives, next to Econ­omy Vice-Pres­i­dent Wil­mar Cas­tro (L) and Planning Min­is­ter Ri­cardo Me­nen­dez, in Cara­cas.

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