Fixed Income Analysis /

Weekly Credit Risk Monitor

    Tellimer Research
    8 May 2017
    Published byTellimer Research
    Credits in Focus: Venezuela – politics takes a turn for the worse
    A series of politically negative events began just over a month ago after the Supreme Court determined it would essentially take over the opposition-controlled National Assembly. The move was widely unpopular and was quickly reversed, but its more lasting effect was to ignite popular protests against the government, which have been ongoing since and appear to have no end in sight.
    Days later, in an attempt to temper the social mood (after over 20 people had died in clashes), Maduro said he wanted to resume dialogue with the opposition and regional elections to occur “right away”. But Maduro had other ideas in mind: last Monday during a Labor Day speech (1 May) he announced the signing of a decree calling for a Constituency Assembly “of the citizenships, not of elite groups or political parties”. The representatives to the Assembly would then not be elected by popular vote (in which the official party would be expected to lose by a steep margin), but rather by unorthodox methods that give Maduro a greater chance of victory. Some analysts consider that as the process starts there would be no regional elections (these should have happened in late 2016) and even the 2018 presidential elections are at risk. Moreover, a new constitution is a leap into the unknown, and could lead to the dissolution of the National Assembly (the only democratic power that is not controlled by the government) and even change the way presidents are elected. And this looks different to the protests a few years ago, in our view. Anti-government protests in early 2014 ended quickly after a number of protesters died in clashes. This time around the opposition and its supporters seem determined to maintain momentum in the streets (even as the death toll sadly keeps rising) as enough is enough, amid a belief that this is the best they can do to oppose a government that keeps changing the rules to perpetuate itself in power.