End Of Sanctions For Venezuela?

The US government could be in talks to end the ban on Venezuelan bonds. This was allegedly confirmed by unnamed sources to HispanoPost, a major digital outlet in the country. Since 2017, US sanctions have targeted debt issued by the government and by state oil company PDVSA. Though issued by the White House, these measures effectively bar Venezuelan bonds from Europe and other markets. Washington DC has sent Roger Carstens, special envoy for hostages, to negotiate with President Nicolas Maduro.

Venezuela already defaulted on its debt, currently worth $60bn. However, an array of foreign funds are attempting to pool bonds and reach an agreement with the government. Some distressed debt funds are even attempting to woo local bondholders, who hold an estimated $1.5bn. According to Horacio Velutini, a local investor, Venezuela’s external debt can offer unprecedented gains. Bonds can be bought at 5 cents on the dollar: “if restructuring leads to recognising 60% of its value, and this is done in 2026, the rate of return would be 1,100%, and if we were more pessimistic and this is done by 2030, the internal rate of return would be 43%”. Venezuela’s government could also offer a deal like Suriname, which is promising bondholders a cut of its future oil royalties after default negotiations.