(Bloomberg) -- Venezuela’s political opposition denounced plans by Corporacion Andina de Fomento’s to buy back some of the country’s shares in the regional development bank, hoping to reduce its exposure to the crisis-mired nation following years of payment delays.
CAF, as the lender is known, has given Venezuela six months to sell 20% its B shares, worth about $170 million, according to opposition lawmaker Angel Alvarado who spoke in an interview. A CAF press official didn’t respond to multiple requests for comment.
“This has to do with CAF running its business solely based on returns,” Alvarado said. “There has to be an ethical component, of understanding Venezuela’s situation, and its future need for organizations like CAF to reconstruct the country.”
The sale would reduce the bank’s exposure to Venezuela, which reached $3.6 billion last year, that’s been a factor in compromising its own credit profile. CAF has repeatedly avoided a default on part of Venezuela by granting it several debt rollovers that have helped it prop up its credit rating.
The beleaguered South American nation is in its seventh year of economic contraction, led by a collapse in oil prices, years of failed policies and rampant corruption. Venezuela’s debt payment is also complicated by its precarious political situation after more than 50 countries recognized Juan Guaido as president last year, citing irregularities surrounding Nicolas Maduro’s re-election in 2018.
A final $500 million extension granted in December of 2018 was widely criticized by the country’s opposition as fraudulent since it wasn’t authorized by the Venezuela’s National Assembly.
Venezuela’s payment delays on its obligations led to a downgrade by Fitch Ratings on CAF’s IDRs to A+ from AA- in January, citing the bank’s credit profile as “deteriorating.”
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To contact the editors responsible for this story: Daniel Cancel at email@example.com, Robert Jameson
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