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Venezuelan Bonds Crash To Lowest Price Since 1998
Bond prices in Venezuela have totally collapsed this morning - at 45c on the dollar, they are the lowest since 1998 - as the realization of the "abyss" they are staring into sparks an exodus from all credit positions in the country. VENZ 5Y CDS rallied 130bps which signals hedgers unwinding and the simultaneous sale of the underlying bonds implies broad-based capital flight (and profit taking) as 1Y CDS surges to record highs at 4830bps.
VENZ Bond prices collapse to 1998 lows...
- VENEZUELA 2027 DOLLAR BONDS FALL TO LOWEST SINCE 1998
Venezuela's 1Y CDS has smashed to record highs implying imminent devaluation or default...
If you didn't think this was serious, think again. (as Bloomberg reports)
The scores of money managers and analysts who crowded into Cleary Gottlieb Steen & Hamilton LLP’s panel discussion on Venezuela last week are a testament to the deepening concern over whether President Nicolas Maduro can make good on the nation’s debt obligations.
During the two-hour event on the 39th floor of the law firm’s downtown Manhattan office, some 150 attendees pressed the lawyers on an array of potential scenarios if Venezuela defaulted, according to interviews with six attendees who asked not to be identified because the meeting was private. Among the topics debated were whether the state oil company’s U.S. gasoline stations could be seized as collateral and whether it was legally possible for Venezuela to restructure the producer as an empty shell to avoid bondholder claims, they said.
For a country that hasn’t missed a foreign bond payment in decades, the questions reflect growing speculation the socialist revolution that transformed Venezuela over the past 15 years under Hugo Chavez and now Maduro has finally pushed the nation to the brink of economic collapse. After this year’s plummet in oil, which accounts for almost all of Venezuela’s exports, investors are now clamoring for insights from the law firm that represented Argentina in two defaults on how the government might defend itself when the money runs out.
Of course, Maduro is vehemnt that it's not his fault...
Maduro said in a televised speech last night that ratings companies had imposed a “financial blockade” on Venezuela to prevent it from borrowing abroad, and that opposition politicians were to blame for the country’s economic woes.
“We have a financial blockade impeding us from getting financing we need to confront the fall in oil prices,” he said in Caracas. Venezuela has lower credit ratings “than countries at war or with Ebola. This has political causes.”
And it appears by the bond price plunge and modest CDS rally in 5Y suggests these various hedged VENZ bond holders did not like what they heard and unwound all their positions.
Which makes sense, as we concluded previously (read more here),
The punchline: "We are thus skeptical that the economic team's plan to tap international lenders, including China, over coming weeks will yield any tangible results."
What this means in simple terms is that Venezuela is now desperate for any cash. As CNBC's Silvana Ordonez reports, citing Diego Moya-Ocampos, a senior political risk analyst at IHS, "Clearly the government is trying to send signs to the market that they are working on necessary adjustments that the economy needs in order to honor international commitments and keep up with social policies, which are essential for political stability. However, these policy adjustments are not enough. This reflects simply that the government is desperately looking for funds to compensate for the lost revenues from declining oil prices."
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Imagine that. "Default" already. What, nobody wants to play "kick the can" anymore?
LOL!!!
I jsut want to see how they pull this off without a CDS-triggering "credit event". That's really all that's left to speculate about.
The same entities who hold those CDS's decide what is or isn't a CDS triggering event. Good luck with that.
In true Obongo fashion,
"opposition politicians were to blame"
Couldn't have happened to a nicer guy.
Well,... maybe Hugo Chavez.
How's that socialism workin' out for y'all in Venezuela?...
todos los venzuelos smell sulfur in the air.
It's a financial war on Venezuela.
What will be the outcome?
We may see much sooner than Ukraine or Syria.
Financial war on Venezuela? Nobody gives a shit about Venezuela. They are collateral damage.
I don't think this is about the Russians either. The bankers have looted the entire commodity complex except for oil...it was only a matter of time before they got around to naked shorting oil futures, and finished the job.
Venezuela called for the gold, and is being socialist.
That's war-on-the-dollar.
This is public example punishment time.
No! The banksters are going after oil and gold because these can be used for asset-backed currencies of the BRIICS and friends. Venezuela has gold and oil, but a dumb-ass leadership and no military. Repeat of Iraq and Libya.
They're toast, unless they can pull their heads out of their arrogant asses. Which I doubt will happen, as TPTB will front run this, and cause enough FUD to delay these hothead Latinos doing anything smart or timely.
Stupid is as stupid does.
amazing how "everything" goes to shit just a few weeks after the Fed stops giving TBTF banks free money for gambling in the global casinos....i mean "markets"
Wait what? Primary dealer banks can still get free money (ZIRP). Wake the fuck up. Where is my billion dollar loan at 0.25%?
And China just said that you cant buy junk bonds....which these are...I doubt China is going to help right now....or anyone.....its fun to watch maduro fall apart....i love the way its all someone elses fault..its so Socialist..Communist...its going to be a tough Christmas.....watch the electricity go out more often as their infrastructure falls apart....the Country is toast...just awaiting the revolution...a sad state to be in..
".i love the way its all someone elses fault..its so Socialist..Communist"
Indeed. Also works for "Progressive".
Oh noes silver and gold! At least Chavez called to get his gold back. Oh it's all gone already...oh...well bonds are just as good.
Venezuela is being punished for calling for the gold.
It has just begun.
Public example (not in executive summary of Torture Report).
The collapse in oil prices was engineered to punish Venezuela? No matter how many times you post that, it still sounds dumb.
"After this year’s plummet in oil, which accounts for almost all of Venezuela’s exports, investors are now clamoring for insights from the law firm that represented Argentina in two defaults on how the government might defend itself when the money runs out."
Now I don't have to make any additional comment for Argentina.
Lets party like its 1999!
Complete, total, abject default to be declared 'non trigger event' in 3...2...1...
Maybe their good freinds in Cuba can extend some credit.
I went to Venezuela twice as a kid. I remember it had nice beaches and hot women everywhere. This was pre Chavez. It's a shame what's happening to them, the country had a lot of potential. Bad management I guess.
It used to be a very strong growth country....sure it had its rich people..and its poor people...but that is South America....they still do....Chavez made billions when he was in charge..his family still lives in the castle..they will not leave..they say they own it...lol...the Army Generals are pretty rich too...they put all their buddies or family members in charge of all the companies they took over..2 for me..one for you..3 for me..one for you is how it goes I think...its the Gruber people who are really going to get hurt....they live on the freebies...much like in the USA...
Utter Bullshit. You are constantly shopping garbage on Vennie. Do you work For GS? Are you short the 27s?
Venezuela's CDSs and bonds will be bought for cents in the dollar by the Squid and ther others doing God's work. Then when the country defaults they'll pressurize their bought and paid for whores in the political sphere to make up the difference, or at least some of it.
Yeah, they can't count on Tim "100 cents on the dollar" Geithner, this time around.
Time for the explanations about how Venezuela could have been fine, it just didn't do Socialism "right" somehow.
Now, about that "having all your eggs in one basket" thing....it's all good until the fox shows up.
"...growing speculation the socialist revolution that transformed Venezuela over the past 15 years under Hugo Chavez and now Maduro has finally pushed the nation to the brink of economic collapse."
Finally?
I guess 15 years is a long time in the Socialist world.
SELL OIL FOR GOLD .... SELL OIL FOR GOLD .... SELL OIL FOR GOLD .... SELL OIL FOR GOLD .... SELL OIL FOR GOLD .... SELL OIL FOR GOLD .... SELL OIL FOR GOLD .... SELL OIL FOR GOLD .... SELL OIL FOR GOLD ....DOHHHHHHHHHHHHHH....
https://www.youtube.com/watch?v=dO37Ql91qqM
Hey Chavez .... it's your old buddy Maudro here .... I hope you can hear me ...... I keep selling our Oil for peices of paper but our currency keeps tanking ..... we are selling our oil for more and more peices of paper, but nothing we do seems to be helping our currency & economy...... What the Phuck should i do? - please send a sign from God...... Sincerely; your old pal Maudro
I can't understand why anybody thinks this would work. If gold is required at the producer's level, it has to come from somewhere. So the refineries would need to pay gold for their oil. And the distributors would need to pay the refineries gold for their oil. and then guess who needs to pay gold for the distributors' oil?
Follow it down the chain, Your Grace, and remember to carry your supply of baby Kruggerrands every time you fill up at the pump.
Are you going to pay gold for your gas? Not just no, but Hell, no. so why do you think anybody else is going to do this?
All of that gold for oil will come out of your pocket personally, you know. I mean, you do know that, right?
And where is all of this retail gold going to come from?
Obviously Gold will be moved to much, much higher prices which will release oodles of Jewelry Gold from the Sheeple - mining activity will be vastly stimulated which will create millions of jobs in developing countries ... and the Gold will only transact at the Sovereign level ..... all the Phucking Pee-ons will still use paper to purchase their energy.
So your hypothesis is that TPTB will pay gold for your energy on your behalf and then will accept paper from you in return. That is the same as saying that they are going to sell their gold to you in return for your paper to them.
I have a cunning plan, milord...
As for gold mines in the third world, that may well happen but it can also take place at home. As I write this, I can look out my window and see the mountain with the single richest square mile of ground on earth, home of the fabled Cresson Vug.
Looks like the profligate printing press nations won't have much of a choice in the not too distant future ..... if you were in Russia's shoes would you keep accepting green peices of IOU's (printed by your enemy) for your strategic commodity export?.
If you've got a direct line to the Kremlin, phone Putin and see if one of his aides has time to fill you in on all the finer details.
If Venezuela can't be brought down, then economic sanctions are a joke.
Too bad Hugo is dead, it was fun making light of him, the creep.