Maduro, president since the death of Hugo Chávez in 2013, won 68% of the vote, according to the electoral commission, on the back of an official turnout of just 46%. Some in the opposition say the turnout was lower.
But despite cries of fraud from opposition parties, broad rejection from many foreign governments, and increased economic sanctions from the USA, few bondholders see change soon.
“We saw this coming, like everyone did, and nothing will change,” said the head of EM research at one large investment fund, who had been in Caracas the week before the elections. “Maybe Maduro will fall at some point if things get worse, but it won’t lead to be remotely differently to the current regime.
“In fact, after this election, Maduro is probably in a pretty strong position.”
Not everyone is so sure: Exotix said on Monday that Maduro was more likely to be out in three months than last the full six year term. However, the research firm appeared to indicate that change within the government, rather than change of government, was a more likely scenario if there was a shake-up in leadership.
“At some point, elements of the ruling PSUV party (moderates or hardliners) and/or military could seek to remove Maduro (either through persuasion or force),” said Exotix head of research Stuart Culverhouse on Monday. “But it is impossible to predict when such a turning point could come.”
Venezuela has been in default since November 2017, and the first legal proceedings from bondholders of state-owned oil giant PDVSA were brought two weeks ago.
But the long-held hypothesis that default would trigger regime change has been proven to be false, and there are few reasons to think things would change now.
“I don’t envisage any progress on restructuring any time soon, even if US sanctions get a lot harsher,” said the first investor.
Not even the threat of bondholders blocking oil shipments to the US, which it had previously been thought would be too much for the Venezuelan government to bear, is likely to force change.
“Countries have survived full US economic boycotts for decades in the past, I don’t think sanctions will lead to regime change,” said the investor. “It all just means life is likely to get a lot worse in Venezuela.”
Maduro’s victory “underscores” Fitch’s view that Venezuela’s debt restructuring will be “long and complicated by legal and political challenges”, said the rating agency on Monday.
“The victory of incumbent Nicolás Maduro in Venezuela's presidential election signals that the political status quo and the country's economic crisis, characterized by hyperinflation, falling oil production, a sovereign debt default and U.S. sanctions, will persist,” said Fitch.
Venezuelan bonds — trading between the low 20s and low 30s — actually rallied slightly on Monday as oil prices enjoyed another strong day. But given the default, there are few real opportunities for mainstream investors, say fund managers.
“For your regular EM bondholders, this is no longer a land of opportunities,” said one UK-based fund manager. “You have to be involved because Venezuela’s weighting in the indices means if it rallied, you cannot afford to miss out.
“But it is hedge fund territory these days.”