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Venezuela Bonds Gain After US Show of Force in the Caribbean

A Petroleos de Venezuela SA (PDVSA) oil pumpjack on Lake Maracaibo in Cabimas, Zulia state, Venezuela.

Source: Bloomberg

By Nicolle Yapur

September 3, 2025 at 9:13 PM GMT+2

Takeaways by Bloomberg AI

• Venezuelan bonds are rallying for a second day, reaching their highest levels in more than six years, as a US strike against alleged drug traffickers adds to pressure on the administration of President Nicolas Maduro.
• The country’s defaulted debt edged up on Wednesday, with some maturities trading at the highest levels since February 2019, according to indicative pricing data compiled by Bloomberg.
• Analysts warned against getting too optimistic, saying the situation could backfire and provide Maduro with an excuse for an intensified clampdown against domestic opponents, or even help Maduro recover public support.

Venezuelan bonds are rallying for a second day, reaching their highest levels in more than six years, as a US strike against alleged drug traffickers in the Caribbean adds to pressure on the administration of President Nicolas Maduro.

President Donald Trump said Tuesday that the US military killed 11 “terrorists” when it targeted a boat carrying drugs from Venezuela in international waters. Defense Secretary Pete Hegseth said Wednesday that the US won’t stop at “just this strike.”

The country’s defaulted debt edged up on Wednesday, with some maturities trading at the highest levels since February 2019, according to indicative pricing data compiled by Bloomberg. Sovereign notes due in 2027 were trading above 24 cents on the dollar, gaining almost a cent in the past two days. Bonds issued by state-owned oil company Petroleos de Venezuela S.A. also advanced.

Read more: Trump’s Gunboat Diplomacy Takes Aim at Maduro: Balance of Power

Venezuela Bonds Jump to Six-Year High Amid US Pressure

Source: Bloomberg

While this week’s events are stoking hopes for regime change, or at least political negotiations, analysts warned against getting too optimistic. Although the operation may be aimed at unsettling Maduro and widening internal divisions, there’s a risk it could backfire, Nicholas Watson, managing director of risk consultancy firm Teneo.

“The situation could provide Maduro with an excuse for an intensified clampdown against domestic opponents, or even – though less conceivably – help Maduro recover a measure of public support,” Watson wrote in a note.

The bond rally could fizzle if the pressure doesn’t lead to any political breakthrough.

“While the increased pressure puts the cohesion of the regime under scrutiny, this does not necessarily mean a political change is imminent,” Barclays analysts Alejandro Arreaza and Jason Keene wrote in a report on Wednesday. “This week’s political theater does not appear to provide a clear path for regime change, yet.”

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