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World News See other World News Articles Title: The Time Has Come: Venezuela May Be In Default In Under 48 Hours This past weekend, Venezuela failed to make $237 million in bond coupon payment, blaming "technical glitches" when in reality it simply did not have the money (or wish to part with it). Adding the $349 million in unpaid bond interest accumulated over the past month as of last Friday, that brings Caracas' unpaid bills to $586 million this month, just days before the nation must make a critical principal payment. And, as BofA sovereign debt analyst Jane Brauer writes, while the bank's base case assumption is that Venezuela will make its debt service payments this year, "the probability of a short term default has increased substantially with coupon delays" and it could come as soon as this Friday, when an $842 million PDVSA principal plus interest payment is due, and which unlike typical bond payments does not have a 30 day grace period but instead is followed by a second $1.1 billion PDVSA coupon on Nov 2, also without a 30 day grace period. As Brauer writes, Venezuela has been in as similar situation of payment uncertainty in the recent past, with bond prices plummeting right before a big payment. For example, just before a big principal payment was due in April 2017 Venezuela received a $1bn loan from Russia just one week before the due date. At that time Ven 27s dropped 16% in a month (from $52 to $45) and recovered completely within a month. Ven 27 has fallen to $35, as Venezuela has demonstrated that it will be a challenge to make all payments on time. The difference between now and April is that coupon payment delays then came after, not before the payment. Meanwhile, Venezuela has managed to redefine the concept of payment "on time" which now means "by the end of the grace period" Sponsored By SmartAsset The Princeton Whiz Retirement Solution Princeton grad and fintech CEO launches free tool to match you with the best financial advisor in your area As we keep track of missed payments, the 5 missed payments, so far totaling $350mn all have a 30 day grace period, as did the $237mn payments over the weekend. The concern is that the principal payments coming up have: No grace period in the bond indenture for an event of default Three business day grace period before triggering CDS The concerning principal due dates are coming up, the first of which is this coming Friday, which means in less than 48 hours Venezuela could be in default unless it can find $842 million: Friday, Oct 27 PDVSA 2020 $842mn Thursday Nov 2 PDVSA 17N $1,121mn The collateral against the first bond is PDVSA's Houston-based refining and retail subsidiary, and in just a few hours, the bondholders may be the (un)happy new ownders of said subsidiary. "This weekend, there's either going to be a lot of bond holders and traders drinking champagne, or there's going to be a lot of stressed fund managers," said Russ Dallen, managing partner at Caracas Capital Markets And to help everyone involved, here are some key tables, courtesy of BofA: Table 1. Ordered by due dates, missed payments and payments due today for Venezuela sovereign and wholly-owned quasi sovereign issuers. Table 2. Sorted by grace period end dates for missed payments and those due today Table 3. Debt service due dates for the next 9 months Table 4. Bond Attributes and face needed to block CACs Table 1 Lots of fine print charts at source. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: Horse (#0)
"It does not take a majority to prevail, but rather an irate, tireless minority, keen on setting brush fires of freedom in the minds of men." -- Samuel Adams (1722-1803)‡ "Resistance to tyrants is obedience to God." -- Thomas Jefferson
Venezuela would be in trouble even with capitalists in charge. They are Lations and increased their population 700% since 1950. And their oil is too expensive to produce at today's prices. As Ann Coulter said, 25% of the population of Mexico in lives in the US. Do you want 50% here? The Truth of 911 Shall Set You Free From The Lie
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