Venezuela Officially Declared In Default

Tyler Durden's picture

Today at 11am, the ISDA Determinations Committee sits down to decide whether an event of default has occurred due to the delayed principal payment on the Petroleos de Venezuela SA, or PDVSA, bond that matured Nov. 2, in the process triggering PDVSA (and perhaps Venezuela) CDS, and officially declaring Venezuela in default.

We won't have to wait that long: moments ago, Wilmington Trust, the Trustee of the 8.5% bonds due 2018, issued by Corpoelec, Venezuela's electricity company, declared that the missed interest payment originally due October 10, and whose 30 day grace period expired on November 9, and for which no pament was sent or received, officially constitutes an event of default.

From Bloomberg:

From the statement:

Wilmington Trust, National Association is communicating the following to you in its capacity as successor trustee (the “Trustee”) to The Bank of New York, as trustee, under the Indenture dated as of April 10, 2008 (the “Indenture”) for the $650,000,000 8.50% Senior Notes due 2018 (the “Notes”) of C.A. La Electricidad de Caracas (the “Issuer”). In a letter to the Trustee and various other parties dated November 30, 2012, National Electricity Corporation, S.A. (CORPOELEC) advised that it is the successor by merger to the Issuer. Capitalized terms used herein but not defined herein shall have the respective meanings set forth in the Indenture.

 

Please be advised that the Paying Agent with respect to the Notes has advised the Trustee that the payment of interest on the Notes that was due on October 10, 2017 was not received by the Paying Agent. The Issuer’s failure to pay interest on the Notes when due on October 10, 2017 constitutes a Default under the Indenture. The Paying Agent has further notified the Trustee that the interest payment was not received by November 9, 2017.

 

The Issuer’s failure to pay the overdue interest on the Notes on or before November 9, 2017 constitutes an Event of Default under Section 5.1(ii) of the Indenture. Pursuant to Section 5.1(b) of the Indenture, if an Event of Default shall occur and be continuing and has not been waived, the Holders of at least 25% in principal amount of Outstanding Notes may declare the principal of, and premium, if any, accrued interest and Additional Amounts, if any, on all the Notes to be due and payable by notice in writing to the Issuer and the Trustee specifying the Event of Default and that such notice is a “notice of acceleration”, and the same shall become immediately due and payable.

It is unclear if this formal default declaration makes today's ISDA determinations committee decision moot, however it now looks quite certain that Monday's meeting between creditors and the country's vice president and chief debt negotiatior, who also happens to be a US-sanctioned drug kingpin, will no longer be necessary.

Today's news will not come as a surprise to CDS holders, who had already priced in a 99.99% probability of default in 5 years.

The full statement is below:

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WOWurstupid's picture

not until the end then they all pay

Stan522's picture

PERFECT....!

Now any one of that country's leaders can run for public office in the USA... well qualified to be a democrat!

buzzsaw99's picture

the squid gets their money back from the:

imf

fed

usa taxpayer, aka the imf

other hedges along with the imf

other hedges along with calpers

other hedges along with the fed

other

BitchesBetterRecognize's picture

default while RUSSIA & CHINA ARE RESTRUCTURING THEIR NATIONAL DEBT & ECONOMY

that means Venezuela can get away from the Western banking caval & start over fresh IF they're clever enough 

Sagnihc Nam's picture

That's what ya get for being socialist.

HANGEMHIGHER's picture

Mostly socialist when it comes to bankers.

abgary1's picture

Not compared to Venezuela.

how_this_stuff_works's picture

Bernie Sanders. Calling Bernie Sanders.

shortonoil's picture

 

The only thing that can save Venezuela is $100 oil, and that is not ever coming again. Dog burgers, and cat stew is their new cuisine. The next failed oil state will be coming soon!

http://www.thehillsgroup.org

Boris Gudonov's picture

That wouldn't save Venezuela.  The incompetent socialists in  charge of the oil industry couldn't even produce enough oil to prop up this failed state even at that price.  Failure is inevitable once the socialists take over, it's only a matter of how long it takes.  It took 70 years in the USSR.

 

Boris Gudonov's picture

Socialist scammers will always attract suckers using the human emotion of envy just like those running Ponzi schemes will always attract suckers using the human emotion of greed.  

bshirley1968's picture

My impression?

"Free at last! Free at last! Thank God Almighty, I'm free at last!"

So they default.....big deal.   Who is going to do shit about it?  Bet they get some loans tomorrow.  Hell, they have been getting loans while this "default" has been coming.

Always going to be jew bankers looking to loan somebody some money and get that juice flowing.

If they have any sense, they will tough it out and tell the banksters to shove their loans up their ass.  Just like you would.....if you had the guts.

Boris Gudonov's picture

I could be wrong but I doubt they could really get away with that.  Russia and China may give them more money though, just to fuck with us.

 

 

bshirley1968's picture

Aren't you a sweet little puppy.  If they are smart, they would only take money from Russian or China.  But I promise you....the bankster in NY are lining up to be the first.

Dude,  they have the world's largest proven oil reserve......they don't need a loan.....they need to get of the debt drip wagon like Hitler and Putin did for their countries.

Vilfredo Pareto's picture

Doesn't your Jew obsession ever get old?  

Kprime's picture

Venezuela needs a good mass murder to redirect attention from the defaults.  too bad the only guns are .gov guns.  they seem to be too incompetent to run a false flag.

TwoHoot's picture

I would love to see a sensible post on derivative counter-party risk. The bond holders will take some losses but the fireworks and bankruptcies will be with the derivative issuers.

Vilfredo Pareto's picture

Lol.  True about the derivative issuers.  It is similar to writing calls.

 

You eat like a chicken, but some day you may shit like a dinosaur.

redmudhooch's picture

God damned banksters at it again.

hanekhw's picture

Wow! An entire government composed of vampires and no Buffy in sight.

bshirley1968's picture

Are you talking about DC?  You got to be talking about DC, right?  Cause there isn't a bigger coven on the planet than in DC.

Spoken like a true 26 week newbie......and Trumptard.

youngman's picture

So this is why gold is down today....NOT...you can buy those bonds cheap today.....but if I was a bondholder..I would be getting my private army together to go take over all Venezuelas assets in the USA...they have a nice refinery and gas stations..

east of eden's picture

Nice Jew pic. Do you think Venezuela cares about a refinery or some gas stations, at this point?

Fuck off and die.

Drop-Hammer's picture

I am no financial expert, but bonds, 'I will gladly pay you Tuesday, for a hamburger today', seem foolish as financial instruments.  Then again, I am a fine one to talk, I have two 401k's which are no different a concept.   

everlearner's picture

very simple: all they need to do is say they are too big to fail, and we the taxpayers, will bail them out...

not the first time, not the last time...

Arrow4Truth's picture

As a taxpayer, you get what you pay for. Hope it works for you.

east of eden's picture

Who fucking cares. this is just another 'american' plot to steal that most precious of commodities, oil. It will not be allowed.

And besides, if I were you you fucks at Langley, I would be far more worried about who is going to control the Panama Canal, because it ain't gonna be you.

Why don't you all just take a cyanide pill and do us all a favor?

Cindy? Cindy C for cunt. Are you listening?

oljw00's picture

You actually think this is an Americal plot to steal Venezuela's oil??

 

LMAO!!

HotelBread's picture

It's a banker plot to steal Venezuela's everything. Bankers love guys like Maduro, just like Vegas loves drunks at the roulette table.

Davidduke2000's picture

Venezuela's oil is pledged to Russia already, like what Iran did.

abgary1's picture

Hey Trudeau, you dope smoking freak, this is what you are setting Canada up for? (I guess I should add Wynne, Notley and the BC coalition to that list.)

I hear Canadian federal government communist are jeopardizing another trade agreement (TPP) because the rest of world won't buy into it's socialist plan.

Who do these retards think they are?

If they think Canada can survive without trade agrreements they are fucked!

Only idiots like Diaz (head of Canada's largest union) think NAFTA was a bad deal for Canada.

Paracelsus's picture

    CDS is a bank run of sorts. The only brake on the runaway train is the ISDA has to meet and decide if a default has occurred. Iceland,Greece,now Puerto Rico. Venezuela...

I read a great book years ago," Postcards from London",by Julian Barnes. He describes how the re-insurance spiral scam worked at Lloyd's of London. The lads down the hall from each-other would sell on the policy,but keep it in house. So Lloyd's gets to keep all the profits and commissions,but the risk is not spread out on the market except for the Lloyd's names,individuals who have pledged their properties as collateral to the firm.

The problem happens when something massive comes into play. When the North Seas platform blew up,Lloyd's was on the hook for $500million or so, but there was $1.5 billion sloshing through the system due to the re-insurance system. This was kept under one roof but the counter-party CDS chain is exposed as quite thin and easily broken.

Deutsche Bank is sitting on a large pile of CDS contracts (to the moon and back).

The US portion of the world pile of CDS toxic trash is backstopped by five banks only (and the Fed). 

JohnGaltUk's picture

Ayn Rand warned us all, now we lose our freedom.

JailBanksters's picture

Wait until the Iinternational Mafia Fund gets involved to save them, they will

really get screwed over then. There won't be anything left of Venezuela, everything will

be stolen as colatteral.

 

Davidduke2000's picture

Maduro is a very shrewd guy, he will negotiate a hair cut on all Venezuela debts by 50%, and extend the payment schedule 20 years.

He will keep his cash to run his country. I am sure trump would understand the art of the bankruptcy.

Silver Savior's picture

I would like to see the United States to default.

bluskyes's picture

Would that be the third, or fourth time?

CrazyCanadian's picture

I would like to see you get hit by a bus.

gallistic's picture

http://www.avn.info.ve/contenido/venezuela-paga-intereses-tenedores-del-...

Hmmm... The Venezuelan Electrical Corporation reports that it transferred the interest due on said bonds on 8 November.

If that is the case, they have a beautiful case for a lawsuit against Wilmington Trust for claiming default.

Either way, this situation will be clear very soon.

Captain Nemo de Erehwon's picture

1. Set up an office

2. Start making official announcements

3. Declare whatever you feel like

SmittyinLA's picture

Would the Venezuelan communist regime have collapsed had they NOT received bailout loans from Ted and Heidi Cruz at Goldman sachs?

http://www.zerohedge.com/news/2014-12-02/how-goldman-sachs-became-broke-...