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Pdvsa 2020 bonds put 'jewel in the crown' at risk
In five days the bonds backed by the already committed Citgo, Venezuela's most precious asset abroad, expire

Pdvsa 2020 bonds put 'jewel in the crown' at risk

Another deadline for the payment of debt expires in less than a week, this April 27, it is about the interests of 71 million dollars in the PDVSA 2020 bond. The default would unleash a legal plot between the creditors of the subsidiary of Petróleos de Venezuela.

 

Pdvsa 2020 bonds are backed by Citgo, Venezuela's most important asset abroad, with three refineries and the largest network of service stations in the United States, the main buyer and most reliable payer of Venezuelan oil so far.

 

Citgo has meant one of the main sources of income for the country, but it is also a symbol of geopolitical power in the world's leading power and within the Organization of Petroleum Exporting Countries (OPEC). This is what has made Citgo a desirable gem for anyone who has outstanding accounts with the Venezuelan state, today a defaulter, product of the deepest crisis in its history.

"The sanctions have weakened Maduro"

 

The Russian oil company Rosneft, the Canadian mining company Cristalex, the American company Conocophillip and the large holders of bonds and papers of PDVSA make their calculations in the event of default and possible outcomes.

 

     "We will do everything we have to do to protect the assets of the republic."

National Assembly Deputy Elias Matta recently told Reuters, noting that the board must inform the National Assembly if it decides to make the payment.

 

The Venezuelan parliament authorized Citgo's ad hoc board on April 9 to renegotiate debt before a payment that could put it at risk expires.

     "They will evaluate if they are going to pay the bonds. That is now your decision "said Matta.

 

José Ignacio Hernández, head of Juan Guaidó's oil team, told Bloomberg, referring to PDVSA's bonus payments:

     "All obligations will be fulfilled, since they are key to the protection of state assets."

 

In August 2018, a federal judge of the United States agreed that the assets of Petróleos de Venezuela could be used to satisfy Venezuela's debts with Crystallex. Now that decision is on appeal, and the intervention of those appointed by Guaidó has been allowed, the arguments have already been heard by the three judges who handle the case of the Canadian mining company in the courts of the Third Circuit of the United States and the decision it could not be delayed much, in case of confirming the initial decision, the door would be open for anyone who maintains Venezuelan debt to collect it with their assets abroad, among them the bondholders.

 

To collect the 1400 million dollars owed to it, Crystallex has focused on the largest refinery in Houston, but two others could also be claimed, in addition to administrative buildings and real estate. Rosneft will have to secure its participation in exchange for the $ 1.5 billion loan backed by the facilities in the United States.

Who are the Russians who manage Putin's Venezuela?

 

The finance team that works with the leader of the National Assembly of Venezuela, and president in charge, Juan Guaido, is inclined to ask the US for authorization. To use the bank accounts, frozen today by sanctions to the regime of Nicolás Maduro, as a guarantee of payment on bail of the state oil company to settle the maturity of the payment of bonds.

 

The bank account that the new Citgo administration would be counting on has 560 million dollars blocked and to use the money in the payment of the bonds, an approval from the Office of Foreign Assets Control of the Treasury Department of the States is needed. United. According to a Bloomberg source, who prefers not to be identified, discussions continue among the Guaidó team about legal strategies.

 

Another potential scenario is for the administration of President Donald Trump to issue an asset protection order to prevent bondholders from submitting claims to Citgo. This strategy was implemented in Iraq after the 2003 invasion, which prevented creditors from seizing local assets.

Venezuela will face Putin

 

If the US makes a decision like this, "a new government in Venezuela could take 5 to 10 years or even more to say that the oil sector is functioning again comfortably enough to pay," a prerequisite for lift the order, said Cecely Hugh, investment adviser in emerging markets at Aberdeen Standard Investments in London.

 

     "Prepare some popcorn because it will be a long movie" said Ray Zucaro, director of investments of RVX Asse

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