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Bondholders pushing for payment
of Venezuela defaulted 2025 notes

- Acceleration on $1.6 billion of notes foretells legal battle
- Some $60 billion of Venezuelan debt remains in default

By Nicolle Yapur and Maria Elena Vizcaino/Bloomberg

Petroleumworld 03 03 2021

Investors who hold at least 25% of Venezuela's benchmark dollar bonds due in 2025 are pushing to speed up payments on the notes after three years of sitting in default.

Deutsche Bank AG , the fiscal agent for the $1.6 billion of notes, received notice from the holders about the acceleration, declaring the debt “immediately due and payable,” according to a Feb. 25 letter seen by Bloomberg News.

The move may be largely symbolic as Venezuela's cash-strapped economy is in no condition to pay, and the South American nation's overseas assets are protected from seizure by U.S. sanctions. Still, the acceleration foretells a legal battle that's brewing over the country's $60 billion of defaulted debt as well as the state oil giant's Houston-based subsidiary Citgo.

“It's basically a frustration,” said Russ Dallen, managing partner at Caracas Capital in Miami. Bondholders are looking at “the possibility of getting a court judgment and getting those Venezuelan assets as everyone is getting in line, trying to get a piece of Citgo and lock in a judgment from a U.S. court.”

Battered by the government's default and a subsequent escalation in U.S. sanctions, the 2025 bonds now trade at just 10.23 cents on the dollar. They join an expanding list of Venezuelan assets in the cross hairs of legal action.

In September, a New York judge ruled that the country owes $390.7 million to Pharo Management and Casa Express Corp in overdue arrears, rejecting claims by the nation's representatives to delay the payment. The following month, London-based hedge fund Altana Wealth Ltd sued over defaulted debt. Bondholders have already accelerated on Venezuela's notes due in 2034.

A spokesman for Deutsche Bank AG declined to comment.

The special attorney's office, which was appointed by the country's opposition-controlled National Assembly, said it doesn't have information on the matter. A Venezuela creditor committee declined to comment. The nation's Information Ministry and Vice-Presidency, in charge of debt renegotiations, didn't immediately replied to a request for comment.


By Nicolle Yapur and Maria Elena Vizcaino from Bloomberg
03 02 2021



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