Published: Thu, November 16, 2017
Global News | By Stacy Ballard

Venezuela defaults on foreign debt repayments

Venezuela defaults on foreign debt repayments

Meanwhile, other prominent rating agencies warned that the state oil company PDVSA had also defaulted.

Washington has also barred US companies from lending new money to Venezuela because of human rights abuses committed during months of anti-government protests and Maduro's efforts to squash the opposition. He pointed out that since taking office in 2013, Venezuela has made more than $70 billion in debt payments, including more than $2 billion in the past month.

"The process of refinancing Venezuela's foreign debt began with resounding success", the socialist government said late Monday, complaining about US financial sanctions and unfair assessments from worldwide rating agencies.

But S&P Global Ratings declared it in selective default on two of its sovereign bonds early this week after it failed to make the coupons within a 30-day grace period.

Communications Minister Jorge Rodriguez said Venezuela was already catching up on the payments.

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Venezuela and PDVSA have around $60 billion in outstanding bonds, according to Thomson Reuters data, while private estimates put total foreign debt between $120 billion and $140 billion.

Moscow and Caracas may sign an agreement to restructure Venezuela's $3 billion debt for 10 years on November 15, a source close to Venezuela's embassy in Russian Federation told Sputnik. The debt was due to be repaid in 2019.

They ended up postponing a decision for a third consecutive day and will reconvene Thursday to determine whether holders of PDVSA debt with default insurance - credit default swaps - can collect payment.

The group in NY - the so-called Determinations Committee for the Americas, comprised of 15 financial firms - met Friday and Monday but postponed the default decision both times.

PDVSA is vulnerable to creditors potentially moving to seize crude shipments or refinery assets overseas, particularly from its USA subsidiary Citgo.

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Pavel Fyodorov, one of Rosneft's first vice presidents, said on Tuesday that Venezuela was paying its debt in tranches of "hundreds of million of dollars", and that his company had no plans to lend any more money to the country.

Creditors who attended a sparsely attended meeting on Monday in Caracas meant to kick off the debt restructuring talks said the government negotiators had offered no concrete proposals, however.

About 70 percent of Venezuelan bondholders are North American, according to government figures, while China and Russian Federation also hold a large share.

But, she told AFP, "the rating agency defaults open up a new category of risk".

The U.S. measures essentially block the issuance of any new Venezuelan debt, while there are also sanctions on its chief negotiators, Vice President Tareck El Aissami and Economy Minister Simon Zerpa, on drug and corruption charges.

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The sanctions also impose a ban on U.S. entities buying any new Venezuelan debt issues, complicating the government's debt restructuring plan.

The United States has designated El Aissami himself a drug kingpin whom USA entities are barred from dealing with.

Adding to the pressure on Maduro was the European Union's announcement of sanctions.

The US called an informal meeting of the UN Security Council, where US Ambassador Nikki Haley slammed Venezuela as an "increasingly violent narco-state" that poses a threat to world security.

Venezuela's envoy to the UN, Rafael Ramirez, called the meeting a "hostile" act of USA "interference".

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