Venezuela’s Maduro Orders Talks to Resume on Defaulted Debt

Ben Bartenstein, Alex Vasquez and Fabiola Zerpa

(Bloomberg) -- Venezuela’s government is ready to resume negotiations with foreign investors on about $60 billion of defaulted debt, according to President Nicolas Maduro.

The embattled leader said Vice President Delcy Rodriguez and Economy Vice President Tareck El Aissami, both sanctioned by the U.S., will lead talks with bondholders. While actions by the Treasury Department prevent Venezuela from paying its debt through traditional means, Maduro said his government has alternatives, including cryptocurrencies.

“We are renegotiating how to pay,” he said at a news conference in Caracas. “There are formulas to pay. It’s what we are applying, because our payment system works perfectly in China and Russia.”

Since Maduro’s call for a debt restructuring in November 2017, Venezuela has defaulted on all its bonds but one. The president assigned El Aissami -- his vice president at the time -- to lead creditor talks. Yet fewer than 100 bondholders attended an initial gathering in Caracas that lasted just 30 minutes.

The challenge -- then and now -- is that sanctions effectively prevent U.S. persons from discussing financial deals with targeted officials, including Maduro, Rodriguez, El Aissami and Finance Minister Simon Zerpa. That’s scared off most of Venezuela’s largest bondholders from taking meetings. Instead, some investors have met with advisers to National Assembly President Juan Guaido, who is recognized by the U.S. and more than 50 countries as the rightful head of state.

In May, an ad hoc board for state-run Petroleos de Venezuela, appointed by the opposition-led legislature, made the most recent payment on PDVSA’s 2020 bonds. Those are the nation’s only notes that aren’t in default.

Maduro said ending U.S. sanctions is a priority. More than half a dozen Venezuela bondholders told Bloomberg they wouldn’t participate in a debt renegotiation until that happens. They spoke on the condition of anonymity, citing company policy.

To contact the reporters on this story: Ben Bartenstein in New York at bbartenstei3@bloomberg.net;Alex Vasquez in Caracas Office at avasquez45@bloomberg.net;Fabiola Zerpa in Caracas Office at fzerpa@bloomberg.net

To contact the editors responsible for this story: Carolina Wilson at cwilson166@bloomberg.net, Alec D.B. McCabe

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