Caveat Emptor

 With no Venezuela : Down The Rabbit Hole segment today it’s all current news…Reuters had this headline, “Small Funds Eyeing Big Gains Pile On Venezuela Debt”. Investors outside the US are looking to increase exposure to Venezuela bonds on the expectation of debt negotiations, according to investors and four financial sources.

 Many of the bonds are trading at pennies on the dollar. Among the most sought after debt are the PDVSA (Venezuela government-owned oil company) bonds, guaranteed at the time of issuance by shares of Citgo, owned by PDVSA. The US Treasury Department said in a recent decision it will not block the potential seizure by creditors of Citgo shares as it has in the past.

 Funds such as Altana (London) and Auriga (Madrid) have been buying bonds from holders who have not collected principal and interest for almost six years, say they need more clarity from the Biden administration. Several investors said they could accept stakes in oil or shares in state companies in exchange for payments in eventual negotiations. Many investors are still lobbying in the US for the possibility of negotiating with Venezuela bonds.

 There is currently more than $60 billion in outstanding Venezuela bonds and the article said the value of Citgo could be $13 billion.

 A couple of points here…These funds are capitalizing on the global optimism regarding Venezuela prompted by the Biden administration relaxing sanctions for Chevron (US), Eni (Italy), and Repsol (Spain) allowing the export of Venezuelan oil through their joint ventures with PDVSA as well as the positive propaganda towards the Maduro regime put out there by recently elected leftist leaders in Latin America. As the saying goes, “Let the buyer beware”.

 These funds offer shares in the respective funds backed by their purchases of Venezuela bonds which, while they are currently valued at pennies on the dollar, could ultimately be worth ZERO! They are backed by nothing, except for the PDVSA 2020 bonds backed by shares of Citgo.

 Altana is the only European fund that has filed claims on the 2020 bonds in US courts so the others will be at the back of the line for repayment and if there is no renegotiation, and why would there be, there are more claims ($60 billion) than assets ($13 billion, although we haven’t seen a valuation over $10 billion).

 If (when) the auction process begins this fall, those with claims already filed in US courts will get something and all those late-comers will get nothing. I’ll say it again, “Let the buyer beware”.

 And we also have Reuters reporting the head of CNE (Venezuela electoral council) announced his resignation along with 7 other council members, ahead of the 2024 presidential elections (which CNE has yet to officially schedule).

 An EU (European Union) electoral observation mission in 2021 said that electoral conditions in Venezuela had improved but structural deficiencies persisted. The replacements will be at the disposition of Maduro’s National Assembly (who do whatever Maduro says) so don’t expect any real change.

 Then we have BNN Bloomberg reporting that Venezuela’s main opposition parties said they will organize their own presidential primaries independent of the CNE.

 The decision means they will have to fund the process itself and secure access to hundreds of polling centers across the country by October, the scheduled date for the primaries.

 They will also have to (want to?) rely on paper ballots rather than voting machines for the election of their candidate.

 Some leading candidates, such as Maria Corina Machado (our personal favorite), had expressed concern over the opposition allowing participation by the government (CNE). She told a group of supporters, “We have taken an important, historic step.” She also stressed the importance of paper ballots for secrecy.

 According to Tamara Taraiuk, Rule of Law Program Director at the Inter-American Dialog, “The great challenge will be how to generate interest …in a context of mistrust in the institutions, political apathy, and with the obstacles that the government will surely try to impose.”

 Then we have Middle East Eye telling us that Iran’s Oil Minister, Jawad Ouiji, says Iran is set to help Venezuela expand oil production and specifically mentioned exporting $2.8 million in technical parts for Venezuela refineries since 2021.

 Remember, oil analysts estimate Venezuela needs approximately $10 billion a year for 10 years to rehab Venezuela’s completely neglected and dilapidated infrastructure….$2.8 million…really?

 Then we have Amir- Hossein, an official with Iranian Vice Presidency for Science and Technology, said Iran is ready to supply equipment, researchers, and experts to Iran-Venezuela Joint Innovation and Technology Center in Caracas and cited the latest MOU (Memorandum Of Understanding).

 He also said they are finalizing previous agreements (Remember all those historic, strategic agreements?). Another bold leap forward in the bilateral cooperation between the two regimes.

 And AS/COA, in a clarification piece, showed us which countries in Latin America have not restored ties with the Maduro regime in Venezuela. They are : Guatemala, Costa Rica, Ecuador, Dominican Republic, and Paraguay.

 Mexico, Cuba, and Nicaragua never broke ties with the Maduro regime (big surprise).

 Uruguay, although they have restored diplomatic relations, is firm in their position that Venezuela, under Nicolas Maduro, is a dictatorship.

 That will do it for the week. We’ll be back Monday with our next segment of Venezuela : Down The Rabbit Hole and more current news. Until then… Have a great weekend everybody!!!

©Copyright 2021 all right reserved.