Neighbours claim immunity from late-paying Venezuela

As investors keep a close eye on Venezuela’s outstanding debt payments, the country’s neighbours insisted that they would not be affected by a default

  • By Katie Llanos-Small, Lucien Chauvin, Oliver West
  • 15 Oct 2017
Email a colleague
Request a PDF

Neighbours of debt-laden Venezuela insisted yesterday they were economically insulated from its default or political collapse as investors keep a close eye on the country.
Venezuela’s increasing regional isolation means the contagion effect of a default would be limited, Claudia Cooper, Peru’s finance minister, told GlobalMarkets. “Our economy is not that heavily related with Venezuela,’ she said.
“Our interaction has been reduced in the past 10 years. We don’t have much commerce. So we don’t need a contingency plan. We don’t own Venezuelan debt.”
Colombia’s central bank governor Juan José Echavarría said the institution had no contingency plan for a worsening situation in Venezuela. “I don’t think many people have contingency plans very well designed, particularly because it was a club of friends,” he said. “Maybe contingency plans will have to be designed.”
Mario Guillén, Bolivia’s finance minister, said the implications of a default or regime change would be more political than economic. Bolivia and Venezuela, along with Ecuador, are part of a diminishing block of left-wing countries in Latin America known as ALBA. Bolivia does not have significant trade with Venezuela to make it a point of concern, he said.
“More than a trade issue, it would affect us from an ideological point of view, because we see that Venezuela has exhibited leadership. A change in administration in Venezuela would leave us virtually alone in the region.”
The comments come ahead of elections on state governors in Venezuela today, and as the Caa3/CCC-/CC rated sovereign increasingly struggles to meet international obligations. 
Coupon payments on two Venezuelan sovereign bonds, two PDVSA bonds and one Electricidad de Caracas bond that were due to be paid this week remained outstanding yesterday, according to Caracas Capital Markets. The country, which is desperately short of foreign exchange, may still pay within the 30-day grace period, said Russ Dallen, head of the boutique investment bank. “It’s possibly a strategy where they’re saving up all their pennies,” he said.
Analysts said it was not clear that Nicolás Maduro’s administration would collapse if the sovereign defaulted on its international debt. 
“How long has the market said this can no longer continue, that it is close to the big change,” said Roberto Sifón-Arevalo, lead analytic manager, sovereign and public finance ratings, Americas, S&P Global, adding that the country was in a “sad situation”. 

  • By Katie Llanos-Small, Lucien Chauvin, Oliver West
  • 15 Oct 2017

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 28,736.25 82 9.49%
2 JPMorgan 26,609.28 77 8.79%
3 Barclays 19,197.35 50 6.34%
4 HSBC 18,884.90 60 6.24%
5 BNP Paribas 18,849.94 38 6.23%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Bank of America Merrill Lynch 9,498.80 2 86.78%
2 Swedbank 160.81 1 1.47%
2 Sumitomo Mitsui Financial Group 160.81 1 1.47%
2 SEB 160.81 1 1.47%
2 Nordea 160.81 1 1.47%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 ING 220.22 2 15.39%
1 Bank of America Merrill Lynch 220.22 2 15.39%
1 ABN AMRO Bank 220.22 2 15.39%
4 Morgan Stanley 114.77 1 8.02%
4 BNP Paribas 114.77 1 8.02%