Financial Times

Venezuela stopped paying bondholders in September, according to central bank data, contradicting statements by President Nicolás Maduro that the country would continue to honour its debts while negotiating a resettlement with its creditors.

The data show that regular foreign debt payments of hundreds of millions of dollars a month, in line with the country’s sovereign obligations, fell to a few tens of millions from last October for fees and the legacy of a 1980s-era restructuring.

“This proves that Venezuela is deliberately hoodwinking bondholders and engaging in a stealth default,” said Russ Dallen of boutique bank Caracas Capital, who follows Venezuelan debt closely.

The data were posted in an Excel file as part of a recent revamp of the central bank’s website and include monthly expenditures in US dollars on public foreign debt payments going back to 1996. Previously, data on foreign debt payments were published in the form of a ratio that revealed little information, Mr Dallen said. “This must have been posted by an intern,” he added.

Mr Maduro announced on November 2 that the country would restructure and refinance its debts after making one last payment on a bond owed by PDVSA, the state-owned oil company. S&P Global, the rating agency, declared the country in default shortly afterwards.

Yet holders of bonds issued by PDVSA and Elecar, a state-owned electric utility, have continued to receive sporadic payments, which have amounted to about $2.5bn since Mr Maduro’s announcement. Several payments have been made late, sometimes after the 30-day grace payment for coupon payments.

No payments at all have been received on bonds issued by the government of Venezuela, despite assurances that the process of payment was under way.
The central bank data, which cover payments of sovereign debt only and exclude obligations by PDVSA and other state entities, show that just $83m was paid in October, compared with sovereign obligations amounting to $465m, according to data from Caracas Capital.

Payments in November fell to $28m, compared with obligations of $183m, and in December declined to $23m, compared with obligations of $242m.

Mr Dallen, who broke the news of the stalled payments to his clients on Monday, said October’s payment included about $74m due on a “Brady bond” that resulted from Latin America’s debt restructuring in the late 1980s. The payments in November and December attributed to foreign debt service would include lawyer’s fees and other costs, he said. Mr Dallen said no money had been received by any holders of Venezuelan sovereign bonds.

He said Venezuela had chosen carefully which PDVSA and Elecar bonds to continue paying. Payments included $984m owed by PDVSA on a bond due in 2020 that is secured by 51 per cent of the shares in Citgo, Venezuela’s US refining and distribution subsidiary. But he said evidence from clearing houses suggested these payments, too, had come to a halt.

“We don’t think they are paying PDVSA bonds either,” he said. “They have been doing it [defaulting] strategically to sow confusion. They have said they have begun the process of paying things they clearly did not pay, and blamed it all on sanctions.”

The US has imposed several rounds of sanctions on Venezuelan individuals and institutions. Adding to pressures last August, it also banned any involvement in new bonds or shares issued by the government or PDVSA. Last month it prohibited involvement in the country’s proposed digital currency, the petro, as well.

A spokesperson for Venezuela’s economic ministry was not immediately available for comment.

Bron: Financial Times