VENEZUELA BOND RALLY SPUTTERS AS TRUMP LOCKS AWAY OIL MONEY
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Venezuela bonds slipped after President Donald Trump moved to block creditors from accessing oil revenue, raising doubts about the size of a payout in any eventual debt restructuring.
Government and state oil company notes fell about a cent across most tenors amid thin trading on Monday, according to data compiled by Bloomberg, undoing some of the gains the market has seen since the US ousted President Nicolas Maduro.
The moves followed Trump’s executive order on Saturday that aims to safeguard oil revenue held in US Treasury accounts. The directive prevents creditors from seizing the funds to satisfy debts or other legal claims, according to a White House fact sheet.
“This is a negative development for bondholders considering that it increases the probability of a higher haircut in debt negotiations,” StoneX strategist Ramiro Blazquez wrote in a Monday note.
Monday’s drop chips away at some of the gains from last week’s eye-popping rally in which some sovereign bonds jumped 10 cents on the dollar as investors ramped up bets on a restructuring of the long-defaulted debt.
Even after the move Monday, notes due in 2027 traded around 42 cents, around levels not seen since 2017. Estimates of what investors might ultimately recoup range widely, from roughly 35 cents to 60 cents on the dollar.
For some, Trump’s directive has led to comparisons with the restructuring carried out in Iraq after the US invaded over two decades ago, according to Barclays economist Alejandro Arreaza and strategist Jason Keene. In that case, the US leveraged its position at the United Nations to immunize Iraqi oil revenue from creditor attachment, which set the stage for a haircut of nearly 90% in net present values, they wrote.
“Creditors should probably now be more cognizant that there are multiple actors in the room, and the dominant counterparty for a restructuring may not be the Venezuelan authorities but rather a Trump administration that seems intent on guiding the contours of the country’s recovery,” JPMorgan Chase & Co. strategists led by Ben Ramsey wrote in a note dated Sunday.
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2026-01-12T17:41:03Z
