RT Journal Article
SR Electronic
T1 Why Venezuela’s Debt Restructuring Is More Challenging than Past Restructurings
JF The Journal of Investing
FD Institutional Investor Journals
SP 37
OP 44
DO 10.3905/joi.2018.27.3.037
VO 27
IS 3
A1 Elena Duggar
A1 Jaime Reusche
YR 2018
UL https://pm-research.com/content/27/3/37.abstract
AB Venezuela’s debt restructuring could be the fourth-largest sovereign restructuring in history. The country’s default was triggered by missed interest payments on both government and Petroleos de Venezuela S.A. (PDVSA) bonds in November 2017. Shortly thereafter, the government announced its intention to restructure its debt. This article compares Venezuela’s crisis with prior sovereign bond defaults and argues that several key features will make restructuring Venezuela’s debt more complex and likely more protracted than in past sovereign debt crises, with likely larger-than-average losses experienced by bondholders. These include Venezuela’s heavy annual debt maturities through the next decade, the interdependence of government and PDVSA finances, the extent of the economic crisis in the country, elevated sociopolitical tensions, lack of transparency on economic data, and U.S. sanctions imposed on Venezuela.TOPICS: Fixed income and structured finance, emerging, financial crises and financial market history