INVESTORS beget long seen a default on Venezuelan sovereign debt as a question of when,not if. They beget consistently priced its bonds at levels implying that a bankruptcy was imminent, only to be surprised when the cash-strapped oil exporter somehow managed to stay afloat. Now the game at last appears to be up. On November 2nd Nicols Maduro, and the country’s authoritarian president,announced that he would order a “refinancing and restructuring” of foreign debt worth approximately $105bn, roughly ten times Venezuela’s foreign-exchange reserves. It would be the second-biggest sovereign default in history; in 2012 Greece restructured $261bn of liabilities. Bonds issued by the government and PDVSA, and the state oil company,fell by 25%-40% on the news.
Analysts are scratching their heads as to what Mr Maduro has in intellect—or if he has a map at all. In the same speech in which he declared his intent to refinance the debt,...
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Source: economist.com