Venezuelan President Nicolas Maduro

Nicolás Maduro (AP)


LatAm in Focus: Why Restructuring Venezuelan Debt Won't Happen under Maduro

By Holly K. Sonneland

The question, says Nomura Securities’ Siobhan Morden, is if the government of President Nicolás Maduro is resilient enough to withstand the fallout of a hard default.

Updated, November 10, 2017 — Venezuela has been on the brink of default seemingly forever now—barely making a $1.2 billion payment at the beginning of November, reportedly—after years of what even investors qualified as a “surreal” willingness to make payments on both the sovereign debts and that of state-owned oil firm PDVSA. They’ve done so largely by slashing imports, which have fallen from $66 billion in 2012 to $13 billion in 2017, according to Torino Capital, leading to severe scarcities of food, medicines, and nearly every good.

There is no prospect, either legally or logistically, to go ahead with restructuring under the Maduro administration.

But something happened on November 2. President Nicolás Maduro announced that the country wants to renegotiate an estimated $66 billion of external debt with bondholders. Restructuring, however, is not going to be possible with the current administration, says economist Siobhan Morden, head of Latin America fixed income strategy at Nomura Securities International, in this podcast with AS/COA Online’s Holly K. Sonneland. The real question, says Morden, is the timing and context of a default—and if the Maduro administration is resilient enough to withstand the fallout.

This podcast was produced by Luisa Leme.