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  #161  
Old 11-14-2017, 06:39 PM
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VENEZUELA

http://money.cnn.com/2017/11/14/news...ebt-default-sp

Quote:
Venezuela just defaulted, moving deeper into crisis
Spoiler:
Venezuela, a nation spiraling into a humanitarian crisis, has missed a debt payment. It could soon face grim consequences.

The South American country defaulted on its debt, according to a statement issued Monday night by S&P Global Ratings. The agency said the 30-day grace period had expired for a payment that was due in October.

A debt default risks setting off a dangerous series of events that could exacerbate Venezuela's food and medical shortages.

If enough holders of a particular bond demand full and immediate repayment, it can prompt investors across all Venezuelan bonds to demand the same thing. Since Venezuela doesn't have the money to pay all its bondholders right now, investors would then be entitled to seize the country's assets -- primarily barrels of oil -- outside its borders.

Venezuela has no other meaningful income other than the oil it sells abroad. The government, meanwhile, has failed for years to ship in enough food and medicine for its citizens. As a result, Venezuelans are waiting hours in line to buy food and dying in hospitals that lack basic resources.

If investors seize the country's oil shipments, the food and medical shortages would worsen quickly.

"Then it's pandemonium," says Fernando Freijedo, an analyst at the Economist Intelligence Unit, a research firm. "The humanitarian crisis is already pretty dire ... it boggles the mind what could happen next."

It's not immediately clear what steps bondholders will take. Argentina went through a vaguely similar default, and its bondholders battled with the government for about 15 years until settling in 2016. Every case is different, though.

Venezuela and its state-run oil company, PDVSA, owe more than $60 billion just to bondholders. In total, the country owes far more: $196 billion, according to a paper published by the Harvard Law Roundtable and authored by lawyers Mark Walker and Richard Cooper.

Beyond bond payments, Venezuela owes money to China, Russia, oil service providers, U.S. airlines and many other entities. The nation's central bank only has $9.6 billion in reserves because it has slowly drained its bank account over the years to make payments.

The S&P default announcement Monday came after Venezuelan government officials met with bondholders in Caracas. The meeting was reportedly brief and offered no clarity on how the government plans to restructure its debt.

The Venezuelan government blames its debt woes -- and inability to pay -- on a longstanding "economic war" waged by the U.S. More recently, the Trump administration slapped financial sanctions on Venezuela and PDVSA, barring banks in the U.S. from trading or investing in any newly issued Venezuelan debt.


But experts say the socialist Venezuelan regime that has been in power since 1999 bears the brunt of the blame. It fixed -- or froze -- prices on everything from a cup of coffee to a tank of gas in an effort to make goods more affordable for the masses. For years, Venezuelan leaders also fixed the exchange rate for their currency, the bolivar.

Those moves were among the driving forces behind the food shortages. Farmers couldn't sell at low prices without going out of business because their cost of production was much higher. Importers also couldn't afford to ship in food, knowing they would have to sell at much lower prices than what they paid for at the port.
When food shortages grew worse, an illegal black market emerged where venders sold basic foods at vastly higher prices than the government's artificially low prices. Inflation soared, making the bolivar almost worthless.
One U.S. dollar currently buys more than 55,200 bolivars. At the beginning of the year, a dollar was worth about 3,200 bolivars, according to dolartoday.com, a website that tracks the unofficial rate that millions in Venezuela use to determine payments.
The International Monetary Fund predicts that inflation in Venezuela will hit 650% this year and 2,300% in 2018.

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  #162  
Old 11-14-2017, 07:06 PM
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I might get to expand my collection of 1,000,000,000 notes soon.
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  #163  
Old 11-16-2017, 09:35 AM
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VENEZUELA


https://www.forbes.com/sites/kenrapo.../#48c601724919

Quote:
Venezuela Did Not Default, But Risks Remain

Spoiler:
The widely reported story of a default in Venezuela missed one key element: it really did not default on over a billion dollars in principal and interest payments.

Venezuela bond holders said in off-record conversations on Tuesday that they received principal payments on PDVSA 2017s and 2020s and another said he was "saved" by a Russian back on Sunday with support for his position in PDVSA 2020 bonds.

On Wednesday, embattled Venezuelan oil giant PDVSA said that coupon payments for its 2019 and 2027 maturing bonds were "in the mail." The government also said that the coupon payment for the Venezuela 2019 and 2024 bonds were on their way as well.

After becoming a leading emerging markets news story on Tuesday, hitting the headlines in the Financial Times and being displayed front-and-center on its home page yesterday, Venezuela is now an afterthought.


The Emerging Markets Trade Association -- a group of emerging market specialist banks and traders -- agreed on Wednesday to continue trading bonds with accrued interest instead of flat. Investmen firms trade bonds flat typically if bonds are in default, and trade bonds based on interest payments due if bonds are believed to be paid at some point. In other words, the market thinks Venezuela will service its debts, though risks remain.

At this point, bond holders have not agreed to call the bonds, nor accelerate, a term used in the market to mean that the key lenders to PDVSA and the sovereign have agreed to demand immediate payment of principal. That is the key thing to watch for. The rating agency downgrades and jumps in prices on Venezuela's credit default swaps have not been accurate indicators to gauge a true Venezuela default.

The Venezuela trade is arguably the riskiest bet in the world. Spreads of Treasury debt hit around 4800 basis points for short-term debt last week then fell to 3900 in a matter of two days, a massive move and a big money maker for investors who bought long when the market was looking most desperate.

Fitch hit Venezuela with a restricted default rating on Tuesday, sending the market into a mild panic. The rating can be triggered when an issuer is late on payments beyond the usual settlement or grace periods, as was the case yesterday.

"The Venezuelan government displays limited transparency in the administration and use of government-managed funds, as well as in fiscal operations, which poses challenges to accurately assessing its fiscal state and the full financial strength of the sovereign. And PDVSA displays similar characteristics," Fitch analysts led by Lucas Aristizabal in Chicago wrote in a note.

Fitch and Standard Poor's notes were the tone setters for Venezuelan bonds yesterday.

"The selective default was expected," says Fernando Pertini, a money manager running Millenia Asset Management, now based in Costa Rica. "Venezuela is no longer a passive, high-yield carry trade. With low cash prices for longer-dated bonds, you are getting sufficient defensive characteristics priced in. If typical recovery value is in the 30s, and you add a strong backstop in support from Russia and China with strategic oil reserves as collateral, you have just enough cushion. If these bonds go into the 20s, we will be there," he says.

Pertini sold out of the Venezuela 2027 earlier this summer.

Close Venezuela-watchers think Venezuela will not default.

One other risk is that an aggressive short selling vulture fund swoops in and buys up a chunk of Venezuela and/or PDVSA bonds, then accelerates and asks for the government to pay up. Such a move is plausible and would force Venezuela into a hard default. This is probably one of two worst-case scenarios. The other is simply the Venezuelans run out of cash.

Venezuela and PDVSA are no stranger to default risks and payment reschedulings. The market has a long memory. Investors tend to punish those who they have entrusted with their capital in the past. In 2003, PDVSA was the sexiest oil company in Latin America. Hugo Chavez came to power and got into a fight with their rather apolitical leadership, sacking key players. Oil production ground to a halt and bond prices fell. Chavez told the company it was going to stop paying employees and start paying bond holders instead. It was a mess. But the debt payments were all made, and within 12 months of the Chavez-PDVSA imbroglio, the country's bonds were trading at a premium. Venezuela is far from trading anywhere near par, let alone a premium.

Bond prices for the Venezuela 2026 fell this month when the government announced its interest in refinancing its debt. But on Tuesday, despite the credit rating agencies notes, there was very little movement in this particular issue.

With principal payments out of the way, Venezuela now just has to deal with making good on its interest payments. No principal is due until later next year, giving the beleaguered of Nicolas Maduro a few months of breathing room to save Venezuela from a real default.

With triple digit inflation and at least two years of economic contraction, Venezuela is going through its own Great Depression. A political crisis also has many people wondering whether Maduro will stand for re-election next year, or hold onto power.
They only -partly- defaulted, not default-defaulted.

https://www.wsj.com/articles/russia-...ief-1510762281

Quote:
Russia Offers Venezuela Debt Relief
Moscow agrees to restructure $3 billion in debt it is owed by its South American ally
Spoiler:
MOSCOW--Russia threw a lifeline to Venezuela on Wednesday, restructuring the more than $3 billion it is owed by its economically and politically troubled South American ally.

The Russian Finance Ministry said the debt of $3.15 billion would now be repaid over 10 years, with minimal repayments during the first six years.

"Reducing the debt burden to the republic from the restructuring of liabilities will allow the funds that have been freed up to be allocated to the country's economic development, to improve the liquidity of the debtor, and to increase the chances of all creditors to recoup credits provided to Venezuela," the Russian finance ministry said in a statement.

The agreement comes just as Venezuela's cash-strapped government teeters on the edge of a default on some $150 billion in outstanding debt . Struggling with a crumbling state-led economic model, President Nicolás Maduro's administration is seeking to renegotiate payment terms with its creditors in an effort to free up import dollars needed to resolve chronic shortages of food and medicine.

"Venezuela is advancing toward the recomposition of its external debt, to the benefit of its people," Mr. Maduro's top economic adviser, Simon Zerpa, said in a Twitter post, lauding the deal with Russia.

Venezuelan officials said the agreement would allow them to increase imports from Russia, including of wheat. The restructuring deal Wednesday doesn't cover $6 billion in debt that Venezuela's state energy giant PdVSA still owes to Russia.

PdVSA, the lifeblood of Venezuela's oil-dependent economy on Wednesday said it made an interest payment on a bond that matures in 2027. The $80 million was originally due on Oct. 12 but had become one of several bond payments that the government has fallen behind on since last month, raising concerns of an imminent default.

Venezuela over the past decade has turned to allies like Russia for economic support as Caracas aimed to distance itself from its ideological foes in Washington. Loans and credits from Russian state-controlled oil giant PAO Rosneft to PdVSA have been vital for the South American country, which has seen oil production fall and its economy shrink by a third since 2014, according to the International Monetary Fund.

Mr. Maduro has blamed his country's financial troubles on a series of sanctions leveled by the Trump administration earlier this year and has turned to his allies, especially Russia and China, for breathing space.

"We believe that the Venezuelan government and people are capable of properly handling their debt issues," China Foreign Ministry spokesman Geng Shuang said in news conference in Beijing Wednesday.

I love the defaulting hokey-pokey
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  #164  
Old 11-17-2017, 01:22 AM
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INDIA

Moody's upgrades India's sovereign rating to Baa2

http://www.moneycontrol.com/news/bus...d-2441001.html

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  #165  
Old 11-17-2017, 10:44 AM
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Nice to have some good news.
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  #166  
Old 12-03-2017, 09:21 PM
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UNITED KINGDOM

https://www.reuters.com/article/brit...-idUSL8N1O06UN

Quote:
Bank of England's Sharp warns against "illusion" about public debt

Spoiler:
LONDON, Nov 30 (Reuters) - A Bank of England policymaker said Britain must not fall into an illusion about its public debt, which soared after the financial crisis and could pose a threat to the country’s economy, despite the lack of apparent concern among investors now.

Richard Sharp, a member of the BoE’s Financial Policy Committee, said it was important to recognise that Britain’s debt levels of nearly 90 percent of gross domestic product might prove stretched if future shocks occur.

“To my mind, low market interest rates and a persistent excess of global liquidity could be creating an illusion of readily available spare national debt capacity,” Sharp said, in comments prepared for a speech to University College London.

“The global financial crisis taught us that fragilities can be more real than apparent and that global spillovers mean that broadly shared systemic fragilities can lead to disastrous contagion and amplification,” he said.

Britain’s budget forecasters last week said the country’s debt was expected to peak at 86.4 percent of GDP this year - about double its level before the global financial crisis - before falling in the coming years.

But they also linked the expected fall in the debt ratio largely to the sale of shares in state-run bank RBS and an accounting switch to get housing association debt off the government’s books. At the same time, the Office for Budget Responsibility sharply cut Britain’s economic growth forecasts.

Bank of England Governor Mark Carney has previously said that Britain remains dependent on the “kindness of strangers” because of its large balance of payments deficit that is funded by foreign investors. (Writing by William Schomberg; Editing by Hugh Lawson)


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