(Bloomberg) -- A group of investors is pressing the Biden administration to lift a ban on the trading of defaulted Venezuelan bonds, arguing that the US is at risk of losing leverage over President Nicolas Maduro’s regime in the event of a debt restructuring.

 By Ezra Fieser and Nicolle Yapur

(Bloomberg) -- A group of investors is pressing the Biden
administration to lift a ban on the trading of defaulted
Venezuelan bonds, arguing that the US is at risk of losing
leverage over President Nicolas Maduro’s regime in the event of
a debt restructuring.
The Venezuela Creditor Committee, made up of US and foreign
institutions holding roughly $12 billion of the debt, hired
Washington-based BGR Group to help it lobby for the removal of
sanctions that prohibit US-based companies and individuals from
buying the obligations, according to public records and four
people familiar with the matter.
Represented by Cleary Gottlieb Steen & Hamilton LLP, the
committee contends that the ban has pushed down prices, allowing
buyers from countries that are not aligned with US foreign
policy to accumulate large positions, which will ultimately give
them a greater say in negotiations, the people said. There is
little chance in the short term for a restructuring of the debt,
which totals $60 billion plus interest, but removing the ban
would create a level-playing field. Under current restrictions,
US investors are allowed only to hold or sell their holdings to
foreigners.
A lifting of the ban would only affect trading on the
secondary market and wouldn’t benefit Maduro’s regime
financially. The committee is not asking for the Biden
administration to give Venezuela access to capital markets to
raise new funds, the people said.
The lobbying effort, which kicked off in earnest in the new
year, adds to the growing pressure on Washington to soften its
approach to Venezuela, including the push to remove sanctions
put in place by President Donald Trump. Last year, the Treasury
Department lifted some restrictions on Chevron Corp.’s
operations in Venezuela and Biden officials traveled to Caracas
to hold direct talks with Maduro to draw him into negotiations
with political opponents.
The idea of lifting the trading ban has gained momentum
recently in Washington, though there is concern among some
lawmakers that it would be misconstrued as benefiting Maduro,
the people said. As an alternative to a total lifting of the
prohibition, the committee is also proposing modifying sanctions
to bar certain buyers.
The Treasury Department declined to comment about whether
there were plans afoot to lift the trading ban.
Read more about how the US-backed effort to remove Maduro
has failed
BGR was retained in the fourth quarter of last year and
paid roughly $100,000, according to a filing with the Senate’s
Office of Public Records. The company assigned a handful of
lobbyists to the effort, including former White House staffer Ed
Rogers and Walker Roberts, who worked for nearly 17 years on the
House International Relations Committee.
BGR did not respond to a message seeking comment.
Some investors are also carrying out individual meetings
with members of the administration and Congress, according to
the people, who asked not to be identified as the discussions
are private. Representatives for the creditors’ committee did
not return a message seeking comment.
The Trump administration imposed sanctions on trading
Venezuelan debt in 2019, which forced US investors to dump their
holdings. Prices have since dropped to deeply distressed levels,
with sovereign and state-owned oil company PDVSA’s bonds trading
below 10 cents on the dollar, according to indicative pricing
compiled by Bloomberg.
The committee estimates US institutions hold around 25% to
30% of the debt currently, down from more than 50% of the bonds
prior to the trading ban, two of the people said.
The US in November allowed Chevron to expand operations in
Venezuela, authorizing it to use the oil sales to recoup debt
owed to them by PDVSA. European firms Repsol SA and Eni SpA also
received the OK to take Venezuelan crude as payment for
outstanding debt. Meanwhile, bondholders are banned from any
dealings with Maduro, and even non-US investors could be
subjected to secondary US sanctions just by engaging in
negotiations with his administration.
One possible reason bond holders have been left out: A deal
like Chevron’s has a direct benefit for the US economy because
of oil flows, said Guillermo Guerrero, senior strategist at EMFI
Group Ltd, an emerging markets boutique in London. “Creditors
are the bottom of the list of priorities for the US
administration.”
Still, the trading ban makes little sense, Guerrero said.
“I think it’s inertia,” he said. “It’s difficult to lift a
restriction once it’s in place.”

To contact the reporters on this story:
Ezra Fieser in Bogota at efieser@bloomberg.net;
Nicolle Yapur in Caracas office


Von meinem iPhone gesendet