JPMorgan, BofA Favor Venezuela Bonds With More Unpaid Interest
Buildings in the skyline of Caracas, Venezuela.
Photographer: Bloomberg/BloombergJPMorgan Chase & Co. and Bank of America strategists are urging clients to buy Venezuelan global bonds with large piles of unpaid interest, betting they could outperform ahead of a potential debt restructuring.
The banks favor shorter-dated notes that have accumulated significant past-due interest, or PDI. Many trade at steeper discounts than longer maturities, leaving room to rally if restructuring terms ultimately reward those arrears.
The recommendations highlight a shift in investor focus — from broad political wagers to more granular positioning within Venezuela’s roughly $60 billion of defaulted bonds. After a 40% surge sparked nearly two months ago by President Nicolás Maduro’s capture, attention is turning to how any restructuring might distribute recoveries across individual bond series.
“When Venezuelan bonds are eventually restructured, we think that PDI will be the primary factor differentiating the recovery value of each individual bond series,” Bank of America strategists, including Lucas Martin and Jane Brauer wrote in a note. Bonds with higher PDI could receive more favorable treatment than current prices imply, they said.
BofA recommends buying sovereign bonds due in 2022 over the 2028s, and the 2019s over the 2025s. JPMorgan strategists led by Ben Ramsey, meanwhile, are advising clients to switch into notes that matured in 2018 instead of the 2023 bonds. In that case, roughly $1.1 billion of accrued past-due interest now exceeds the $1 billion principal of the bond itself.
Venezuela High-Coupon Bonds Outperform in January
Notes due in 2022 have higher past due interest
Source: Bloomberg
Note: Data is normalized with percentage appreciation as of February 23, 2026.
Even so, uncertainty remains high around both the timing and structure of negotiations. Venezuela’s total debt burden — including sovereign bonds, PDVSA notes, bilateral loans and arbitration awards — is estimated at about $170 billion, far larger than the country’s gross domestic product. US sanctions also continue to restrict formal talks between creditors and the nation’s interim authorities led by Delcy Rodríguez.
Shorter maturities have historically lagged, but investors positioning for a restructuring are increasingly exploiting the price gap. Bonds due in 2022 have climbed nearly 48% this year, compared with gains of about 40% for notes that trade more actively.
“The reason behind rising interest in shorter Venezuelan bonds is that in the case of the ’18s and ’22s, we have very high coupon rates that lead to the buildup of PDI,” said Ramiro Blazquez, a strategist at StoneX.
Those dynamics have made shorter-dated notes the standout performers in a rally that has lifted sovereign and state oil company PDVSA bonds to their highest levels since defaulting in 2017. Investors are wagering that political change could eventually pave the way for a comprehensive restructuring.
“We are moving to a more discerning phase of price discovery,” said David Austerweil, emerging-markets deputy portfolio manager at VanEck in New York. “As prices rise, the timing and likely structure of a restructuring should be more accurately reflected across the curve.”
