So far, there are few signs from the bond market that the outlook is improving. Defaulted notes issued by state oil company PDVSA trade between 5 and 6 cents on the dollar, while sovereign bonds are between 9 and 10 cents, according to data compiled by Bloomberg. The bonds recovered in September after the government reached a debt swap deal and held negotiations with the opposition, raising optimism that both sides were heading toward a deal that would include the easing of some sanctions by Those talks were suspended last month after the government withdrew. Analysts say Sunday’s election has the potential to bring both sides to the table to talk again and provide a path for the presidential election in 2024.

 

Operators await EU verdict on Venezuela elections

BY MRT ON NOVEMBER 20, 2021

(Bloomberg) – Bond traders are monitoring Venezuela’s upcoming elections for signs that certain sanctions relief is looming, which could fuel the dormant market for the country’s defaulted debt.

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While the ruling Socialist Party is likely to win a majority of mayors and governors in Sunday’s regional elections, investors are more focused on whether European Union monitors will put their stamp of approval on the elections. That would motivate President Nicolás Maduro and his political opponents to resume stalled negotiations aimed at resolving a political impasse and tackling an economic crisis, including asking the United States to ease sanctions, they say.

“The market has given up on any regime change in the near future and is being much more pragmatic. It is seeking sanctions relief, perhaps even financial sanctions relief, and a new commitment from Venezuela to the rest of the world, ”said Dean Tyler, London-based director of global markets for BancTrust.

So far, there are few signs from the bond market that the outlook is improving. Defaulted notes issued by state oil company PDVSA trade between 5 and 6 cents on the dollar, while sovereign bonds are between 9 and 10 cents, according to data compiled by Bloomberg.

The bonds recovered in September after the government reached a debt swap deal and held negotiations with the opposition, raising optimism that both sides were heading toward a deal that would include the easing of some sanctions by Those talks were suspended last month after the government withdrew. Analysts say Sunday’s election has the potential to bring both sides to the table to talk again and provide a path for the presidential election in 2024.

“In the short term, a positive EU report could give bonds a temporary boost, but investors should be on the lookout for 2024,” said Guillermo Guerrero, strategist at Emfi Group Ltd. in London. “It is highly unlikely that negotiations or elections will usher in a material change in the underlying debt situation, at least for the next year.”