Fixed Income Analysis /
Venezuela

Venezuela: Despite a brighter outlook bondholders will have to wait

  • A series of favourable events brighten the outlook for a negotiated solution to the Venezuelan crisis

  • In particular, US midterms and the Macron-Maduro encounter favour optimism

  • But the continuity of financial sanctions in the run-up to the election will hold back a sharp rebound of bonds

Ramiro Blazquez
Ramiro Blazquez

Head of Research and Strategy

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BancTrust
16 November 2022
Published byBancTrust

The balanced outcome of US midterms combined with sheer activism from France, Colombia, Argentina and even President Maduro himself to inch closer to new agreements will produce a breakthrough in Venezuela negotiations, in our view. This should pave the way to a flexibilisation of trade sanctions. Nevertheless, financial restrictions will probably be kept in place until after the Venezuelan presidential election of 2024. Thus, we reaffirm our expectation of a material rebound of valuations starting to take shape only as we get close to the ballot, despite progress in the political front.

In this regard, we identified 5 relevant recent events that support a more constructive view of the current Venezuelan political standstill, most of them related to international factors and actors. Progress in the domestic front was also noteworthy, after the designation of the National Commission for the Primaries by the Unitary platform. Finally, news, not yet confirmed, of a resumption of the oil-for-debt swap with the European oil companies Eni and Repsol points to another potential positive signal regarding potential advances in the political negotiations.