LONDON (Reuters) – Dollar bonds of Venezuela’s government and state-run oil company PDVSA hit their highest level since 2017 on Thursday, after U.S. backing for opposition leader Juan Guaido spurred investor hopes for a turnaround in the crisis-stricken country.
Guaido declared himself interim president on Wednesday, winning backing from Washington and parts of Latin America, and prompting socialist Nicolas Maduro, the country’s leader since 2013, to break relations with the United States.
OPEC - Country - Crude - Oil - Reserves
The South American OPEC country has the largest crude oil reserves in the world and is a major supplier to U.S. refiners, but has been brought to its knees by mismanagement and hyperinflation forecast to reach 10 million percent this year.
Maduro’s government began gradually halting interest payments on some $50 billion in publicly traded debt in 2017 in an effort to save dollars for the collapsing economy.
Government - Companies - Interest - Payments - Turmoil
The government and state-owned companies also owe more than $8 billion in unpaid interest and principal payments amid turmoil in the once-wealthy nation.
Many of Venezuela’s sovereign bonds have been trading at less than half their face value since late 2014 as investors have become resigned to the fact that much of the money originally lent to Caracas will not be paid back.
Bond - Prices - Half - Maduro - Debt
Those bond prices fell sharply again in the second half of 2017 when Maduro publicly called for a debt restructuring, with many left trading at a quarter of their face value.
“For the first time there is a feeling that there is pressure coming from both outside and inside the country,” said David Nietlispach at Pala Asset Management, whose firm holds both sovereign and PDVSA [PDVSA.UL] bonds.
Step - Americans - Government - Anymore… - Top
“It is a massive step if the Americans do not recognize the government anymore… On top of that, it looks like we have a candidate who seems to be able to unify the opposition.”
The European Union added its...
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