How Goldman Sachs Became Broke Venezuela's Loan Shark

Add the title of "loan shark to Dictatorships" to Goldman Sachs many varied roles around the world. As Venezuela teeters on the brink of tearings its utopian social fabric apart (by which we mean paying its soldiers while impoverishing its people to in order to maintain 'peace') crushed by plunging oil revenues, everyone's favorite American bank 'generously' offered to buy (from Venezuela) $4bn worth of oil debt owed by the Dominican Republic for 41% of its value, according to El Nuevo Herald. Doing god's work indeed. "This is a tremendous bargain for Goldman," said one source, as Venezuela is "liquidating the few assets they have, trying to find the cash flow, cash, they do not have."


Venezuelan bonds continues to crash


As El Nuevo Herald reports,

Cornered by liquidity problems, the regime of Nicholas Maduro sold to US investment bank Goldman Sachs obligations for more than $4,000 million Dominican Republic owed to Venezuela for oil supplied through Petrocaribe, receiving only 41 percent the total value of debt, sources close to the operation.


The transaction would involve a gain of 59 percent for Goldman Sachs, equivalent to $ 2.360 billion, on payment of $ 1.750 million grant to Venezuela for the obligations in August this year totaled about $ 4.090 million.


According to the sources, who spoke on condition of anonymity, Goldman Sachs is currently holding talks with the Venezuelan government to reach a similar agreement on oil debt that Jamaica has with the South American nation.




"This is a tremendous bargain for Goldman Sachs," said one of the sources. "The only negative is that it is a debt to 20 years, but the discount is as bestial, Goldman snatched from the hands in exchange for giving PDVSA a little liquidity."


But the operation denotes a high degree of desperation of the Venezuelan state whose oil sales generate more than 95 percent of the dollars entering the country.


"They're liquidating the few assets they have, trying to find the cash flow, cash, they do not have," said the source.




"They're scraping the pot" from New York said Venezuela's former ambassador to the UN, Diego Arria, who has close links with the international financial sector.


It is also a clear signal to the international markets on the economic problems facing the regime.


"A discount as significant [59 percent], besides the great monetary loss for the nation, is a great loss of credibility on the Venezuelan financial situation," said Arria.


"But it could also be a crime," the diplomat added. "Giving such obligations at a discount from those proportions, is attacking the national heritage".




But the financial crisis facing the regime generated great doubts about the country's ability to continue to support the costs of subsidizing oil economy with Cuba and its other allies.

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