Tue, Nov 14, 2017 - Page 10 News List

On eve of talks, Venezuela’s Maduro dismisses default

PROBLEMATIC:Maduro vows to restructure and refinance the country’s debt, but US sanctions have made it practically impossible for US banks to deal with Venezuelan officials

Reuters, CARACAS

Venezuelan President Nicolas Maduro on Sunday said the country would never default on its debt, a day before debt talks with creditors that is to be overseen by two officials under sanction by the US.

Vice President Tareck El Aissami and Economy Minister Simon Zerpa were yesterday to meet with creditors in Caracas, Maduro said, contradicting earlier reports that sanctioned officials would skip the meeting to reduce investor anxiety about attendance.

“People have bet on Venezuela declaring default — never,” Maduro said during his weekly Sunday broadcast. “Default will never reach Venezuela. [We] will always have a clear strategy and right now that strategy is to renegotiate and refinance the foreign debt.”

The talks are aimed at beginning to restructure about US$60 billion in bonds.

US sanctions have made it practically impossible for Venezuela to refinance debt because US banks cannot buy newly issued Venezuelan bonds. Restructuring talks are equally problematic because the sanctions bar investors from dealings with several officials on the newly appointed debt commission.

Maduro’s vow to restructure and refinance in such an environment has left investors wondering if he is in fact preparing the groundwork for default.

“Tomorrow we begin the first round of renegotiation and refinancing of Venezuela’s debt. It will be presided by our companion Tareck El Aissami ... and the presidential commission that I have assigned to this task,” he said.

Market sources last week said they had been told that officials sanctioned by US President Donald Trump’s administration would not appear at the meeting.

Trump’s administration has imposed several rounds of sanctions this year, accusing the Venezuelan government of undermining democracy and violating human rights.

Investors last week were optimistic about the meeting.

Bonds issued by Venezuela and state oil company PDVSA on Friday rallied as efforts to keep current on obligations fueled optimism ahead of the meeting.

Even though state-run power utility Corpoelec was on Friday declared to be in default for failing to make an interest payment on time, investors were heartened when the company said it had sent the money.

Maduro on Sunday said Corpoelec had indeed paid but that banks have been sabotaging such transfers, echoing frequent accusations that the country is besieged by an “economic war.”

“What happens is that international banks hide the funds that have already been deposited — they hide them,” Maduro said. “Citibank, you gangsters at Citibank, you have tried to do damage to our country on various opportunities.”

Citi declined to comment.

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