Venezuela Signs $3.2 Billion Debt Restructuring Deal With Russia

Tyler Durden's picture

As Venezuela teeters right on the brink of complete financial collapse, Bloomberg reports that Russia has agreed to restructure roughly $3.2 billion in outstanding obligations.  While details of the restructuring agreement are scarce, both sides reported that the deal spreads payments out over 10 years with minimal cash service required over the next six years.

Russia signed an agreement to restructure $3.15 billion of debt owed by Venezuela, throwing a lifeline to a crisis-wracked ally that’s struggling to repay creditors.

 

The deal spreads the loan payments out over a decade, with “minimal” payments over the first six years, the Russian Finance Ministry said in a statement. The pact doesn’t cover obligations of state oil company Petroleos de Venezuela SA to its Russian counterpart Rosneft PJSC, however.

 

“The terms are flexible and very favorable for our country,” Wilmar Castro Soteldo, Venezuela’s economic vice president, told reporters in Moscow after the signing. “We will be able to return to the level of commercial relations with Russia that we had before,” he added, noting that a deal to buy Russian wheat will be signed next week.

This is the second time Russia has agreed to reschedule Venezuela’s debt payments after agreeing to an extension last year. Still, Caracas failed to make payments amid an economic crisis triggered by low prices for oil. Rosneft has also provided several billion dollars in advance payments for Venezuelan crude supplies.

The rescheduling pact is a “demonstration of the desire to maintain ties with the current Venezuelan leadership,” Viktor Kheifets, an expert in Venezuela at St. Petersburg State University, said by phone. “Russia isn’t happy with everything that the government there is doing but Venezuela is an ally where Russia has economic interests and Moscow is firmly against a forcible change of regime there.”

 

In a website statement announcing the deal, Russia’s Finance Ministry said, “The debt relief provided to the republic from the restructuring of its liabilities will allow funds to be allocated for the country’s economic development, to improve the debtor’s solvency and increase the chances of all creditors to recoup loans granted earlier to Venezuela.”

Putin Maduro

Of course, the deal with Russia comes as attempts to hold talks with Venezuela's other creditors faltered this week. President Nicolas Maduro had summoned holders of some $60 billion of bonds issued by the government and PDVSA to begin a renegotiation as the nation’s cash crunch worsens, but as we noted previously (see: S&P Downgrades Venezuela To "Selective Default" After Bondholder Meeting Devolves Into Total Chaos), the meeting turned out to be nothing more than a photo op. 

Meanwhile, as the Financial Times noted yesterday, failure of ISDA committees to determine whether or not a default event actually occurred when Venezuela blew through its grace period, has only added to the confusion of the restructuring process.

A finance industry committee convened to discuss whether Venezuela’s state oil company has defaulted on its debts has elected to delay the decision once again, underscoring the uncertainly swirling around the country’s bond payments.

 

Venezuela belatedly came through with a $1.1bn PDVSA bond payment last week, but only well after a three-day grace period following the bond’s maturity on Nov 3. That led to a request that the International Swaps and Derivatives Association’s “determinations committee” consider whether PDVSA was in default.

 

The Isda committees have the power to declare a “failure to pay”, which would trigger insurance-like contracts on PDVSA’s bonds, known as credit-default swaps, even if the actual bondholders haven’t declared it a default. But in a statement on its website on Monday, Isda said that the committee had decided to reconvene on Tuesday at 11am to discuss the PDVA question further.

All of which has left bondholders in limbo...

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JibjeResearch's picture

Russia consolidating the oil supply....

Ghost of PartysOver's picture

So Russia gets interest payments or oil infrastructure in case of default.  Sounds like a GS deal to me.  Venezuela just sold their soul to Russia and Russia gets a foothold in South America.  Well played Putin.

ne-tiger's picture

Nothing wrong for russian, just couple of billion wouldn't last.

bobcatz's picture

Russia and China are ALL business. While the USSA is ALL warmongering for Israhell. http://wp.me/p4OZ4v-2g9

eclectic syncretist's picture

Wow!!! Fucking Wow!! For a few minutes of running the printing presses Russia gets a positive working relationship with the country controlling the largest proven energy reserves in the world, and also gets an internationally valid claim against said oil if things go south on their no-lose deal. 

The real shocker is how it took so long for this to happen. That's where the real story is here.

https://en.wikipedia.org/wiki/Oil_reserves_in_Venezuela

When do we start hearing about the petro-ruble, to go along with the petro-yuan, gold-backed yuan ect......How's that dollar doing now you stupid motherfuckers in Congress?

JibjeResearch's picture

We could have Venezuela's oil though peaceful mean...

but too many imbeciles in the Gov.

HopefulCynical's picture

My from-the-hip take? If you hate Russia, you love this deal. Do we really think Venezuela is going to mend their commie ways? So they've just gotten 3 billion plus from Russia, which they're not going to use in any sort of responsible fashion.

Had Putin waited until street rioters had dragged Maduro out of his palace and lynched his ass, that would be worrisome. But when oil prices, which are Venezuela's one source of income, crashed, they doubled down on their commie bullshit. Maduro is Chavez 2.0; the gibs will flow, the gibs must flow. Gibs is life, commie bitchez.

I'll wait to see, but this looks like a bad deal for Russia. Putin is shrewd, but he's also besieged and ambitious, and I think he may have overplayed his hand.

BennyBoy's picture

 

Russia undid years of CIA dirty work in Venz.

Next up: CIA rebels wanting to free Venz from dependance on oil.

HopefulCynical's picture

Yes, I read Confessions of an Economic Hitman also, and found it very credible. But the fact is that regardless of CIA predations, South American countries are rotten with some of the most corrupt communism on the planet, and that's saying something. They're NOT going to give that up, and given Russia's past, they're in no position to demand otherwise. Venezuela could turn into a giant bottomless financial pit for Russia, especially given the fact that Venezuela never even modernized their oil infrastructure when oil was north of $100/bbl, much less diversified into refineries, let alone anything non-petroleum related. What do you suppose it will take to modernize that basic existing infrastructure, so that it's in any way possible for a partnership between Russia and Venezuela to be profitable? Because that's what everybody seems to be seeing here, Russia buying its way into partnership in the Western hemisphere.

Putin might come out smiling, but to me, that's a coin flip outcome at best. I'm pretty sure the Venezuelan commies are gonna fuck him, when it's all said and done.

ebear's picture

The corruption on the Right is an order of magnitude greater than the corruption on the Left in Latin America.   If you had any knowledge of the region you'd know that.

scaleindependent's picture

Exactly. We will be using the Monroe doctrine to claim Russia not only interferes in elections, American Power plants, but also in our sphere of influence: The Western Hemisphere. How dare they! /s

ebear's picture

"Do we really think Venezuela is going to mend their commie ways?"

Saw the collapse of the USSR coming, did you?  How about China opening to the west and shifting to private property and investment?  Catch you by surprise as well?

With foreign investment comes foreign advice.  We like to see how our money's being spent, no?

Besides the cash, Russia and China bring good advice to the table, the first being to ease off the rhetoric and start making practical changes.  You'll see.  If they can do it at home, I'm sure they can convince other "commies" especially when they're writing the checks.

JohnGaltUk's picture

US dollar has still about another 15 years to run yet. Both China and Russia markets are not deep enough to park big money at the moment. Especially Russia, its whole economy is about the size of the state of California.

Volkodav's picture

       comparison is meaningless

ebear's picture

When measured in GDP.  Debt to equity ratios tell a different story, not to mention the mountain of derivatives that support that. 

Stroke's picture

....and Hildabeast thought SHE would pick the bones

scaleindependent's picture

U.S. will intervene claiming Monroe doctrine privileges.

VZ58's picture

Indeed. Putin knows what he is doing. can't say that about anyone in the West unless it is about helping Israel.

ne-tiger's picture

They know what to do to help Isreal

Salsa Verde's picture

The US attempted economic warfare with Russia and Putin responded by forming a new Russian Oil dynasty.

Wonder what the odds of them trading in Petrodollars is?

JRobby's picture

Just tack it on the back end. Keep the carbon flowing!

HRClinton's picture

Petro-Ruble + Gas Ruble. = Energy Ruble

Gold Ruble.

Energy Ruble + Gold Ruble = Check Mate

Clock Crasher's picture

Jim Willie called it

Conscious Reviver's picture

Everybody? Is Brando Smith Nobody? Is Runningman Nobody? Implied Violins? They're all saying SDRs are what comes next, that collapsed global fiat will be replaced with new and improved SDR basket of collapsed global fiat.

YUNOSELL's picture

Hopefully this means Venezuela can get their shit together now, and start feeding their people

Juggernaut x2's picture

Russia will commence airlifting borscht and vodka to the Venezuelans

HRClinton's picture

Not airlifting. Shipping. 

Next up: Russian Naval Port in Venezuela.

Sailors and V women are getting excited. 

(USB song: "In the Navy... into Davey". Lulz)

GunnerySgtHartman's picture

Not likely, sir.  This only puts off the inevitable.  It would be interesting to know what Maduro whored out to Russia to get the restructuring.

VZ58's picture

Well sure - kinda like what Congress is doing right? Meanwhile another opportunity missed by the West and guranteed oil for Russia- soon to be paid in non-petrodollars. 

GunnerySgtHartman's picture

I don't think that Maduro would be willing to deal with the US, at least - his ego won't let him do it.  Other Western nations, perhaps ...

HenryHall's picture

Not deal with the US?

Where do you think Venezuela gets refined product from?

GunnerySgtHartman's picture

We're dealing with Maduro here - common sense is not his strong point.

JibjeResearch's picture

We missed a great opportunity... because of imbeciles in DC.

scaleindependent's picture

We missed a great opportunity because we wanted them to default that way we can then own them and or invade them.  Too bad Russia interfered with our area of control. Dont worry though. We will claim Monroe doctrine exceptionalism to claim Russia is interfering in the western hemisphere.

Justin Case's picture

Venezuela can get their shit together now

If Venezuela can get rid of the covert CIA and other mercan NGOs operating in that country. Remove the illegal sanctions as well. Phukin merca.

Son of Captain Nemo's picture

I just saw something happen in Lugansk (https://southfront.org/lpr-leadership-clashes-national-security-team/) and "Raqqa"!!!

"Turkey on Wednesday condemned as “an extremely grave revelation” the potential escape of hundreds of extremists from the Syrian city of Raqqa. The US-backed Syrian Democratic Forces (SDF) said over 3,000 civilians had left Raqqa on October 14 as part of a deal negotiated between officials from the provisional Raqqa Civil Council and Islamic State (IS, formerly ISIS/ISIL) fighters, AFP reported. The US-led coalition later acknowledged that of these up to 300 were seen as ‘potential’ IS fighters. Ankara has long criticized Washington for working with and arming the Kurdish YPG as the main US ally in the fight against IS."...

What might you ask is the difference in these asymmetric act(s) of warfare?...

Only one of those sides has the "sound money"! Can you guess which of the party(s) "DOES NOT"?!!!

Tick... Tock... Tick... Tock..

Mike Masr's picture

I would take what you read on southfront.org with skepticism and a grain of salt.

Poroshenko's very existance is under threat from his own neo-nazi banderists and he is desperately trying to divert attention away from his problems by escalating the attacks on innocent civilians in the Donbass. Read below how his Ukro-nazi forces attacked a school bus with 40 kids.

http://nrt24.ru/en/news/ukrainian-army-has-gone-totally-mad-school-bus-4...

Better to also keep an eye on these websites to get a more balanaced perspective.

Novorossiya Today

http://nrt24.ru/en

Fort Russ

http://www.fort-russ.com/

 

Son of Captain Nemo's picture

M

I agree with everything you're saying but just look at the before and after of Ukraine circa 2014 and the level of desperation that still prevails in that Zionist contrived 'basket case".

If you had told me that Porko-Jew would still be the titular head in 2017 after what the U.S. has already done to it I probably would have laughed in your face outside of 1 year of that coup...

Well... That junta is still alive and well -isn't it!

Justin Case's picture

The game was over once the mericans lost the prize they were after. Sevastopol. Now they are of no value to NATO or the empire. Let them rot.

Putin thinks a dozen steps ahead of the criminals in DC, the empire of chaos.

He also helped Ukraine people by sending tons of food and asylum for those being persecuted by the nazi sympathizers.

Son of Captain Nemo's picture

Well J C

Tell that to the roughly 20 to 60 thousand that died? As well as the 2 to 4 million that fled Eastern Ukraine after the infamous "Fuck the EU" phone tap from that smelliest of Zionist horned and bifurcated tailed cunts???...

Last I checked overthrowing sovereign government(s), destroying those sovereign government's property and torturing and murdering it's peoples are still considered war crimes!!!

Justin Case's picture

merica is good at breaking things, not fixing or making better for those that live there. Libya example 2. Merican sponsored. Merica funded the coup de tat in Ukraine and now abandoned them. Russia gives humanitarian aid, what did merica do after their prize was snatched? They left Ukrainians to rot. Foiled plans. Did merica send anything other than weapons?

Laughing.Man's picture

"merica is good at breaking things, not fixing or making better for those that live there."

All by design.

HenryHall's picture

Re: Lugansk and "return to Ukraine" Danego has said that his words were taken out of context and redistributed with intention of misleading.

See https://wins-go.livejournal.com/208977.html  (google translate is good enough)

Danego's words would be better rendered as "Ukraine no longer exists".

Mike Masr's picture

Thanks Henry.

I look forward to the day when DPR forces cut like a hot knife though butter all the way to Kiev.

And I pray for the day I can watch on youtube these fucking banderist pigs hang for their war crimes!    

HowdyDoody's picture

The Ukro-Nazis have been shelling civilian infrastructure in east Ukraine throughout the Minsk 2 'ceasefire'. The Novorossians have been very patient, following the rules of disengagement. A short while back, they did get to the stage of saying enough is enough in one area, so they quite precisely took out 2 Ukro-Nazi artillery groups and 3 armored bunkers used to control their fire. This was done without casualties to themselves.

The Ukraine military is slowly turning into a pure Ukro-Nazi outfit, with only ~4% of the latest draft (the 7th since the start of the troubles) actually joining up. The Novorossians will have no qualms about trashing them when the time comes.

 

RationalExuberance's picture

That is quality Russian shilling, man. 

HRClinton's picture

For their sake, I hope that Turkey has finally figured out that all they ever were or will be, is a "Junior JV player" in the Anglo-Zionist sphere. 

Their ONLY purpose was to stymie and contain the Soviets, and now the Russians. Cause that's what (((Bolshevik descendants))) and Rothschilds want. 

Turkey is just an Asset, a bunch of turkeys to the A-Z Team.