Venezuela May Or May Not Be In Default, But Is Definitely Not Paying Its Bills Anymore

Back in November, Venezuelan President Nicolás Maduro boldly proclaimed, “Venezuela will never get to a default.” This was a bold claim for a country already having trouble paying its bills, but also pretty par for the course for cash-strapped South American demagogues. What’s even more remarkable is that Venezuela’s bondholders continued to believe him for so long.

Traders debated for weeks about whether to continue pricing the oil-rich country’s sovereign debt with the assumption that it would keep making interest payments. But as the pile of unpaid coupons racked up, the association for emerging market debt traders this week threw in the towel and announced that from now on, the market should assume Venezuela isn’t likely to pay.

OK, so it’s a default, and Venezuela is the new Argentina, right? Well, maybe, but not exactly, but probably, because words don’t mean things anymore.

The country is behind on several payments, particularly for its sovereign bonds. But some payments have been arriving late and the country has not said it plans to default on its debt. The situation has made it difficult for traders to determine if bonds should trade as if the country is in default or as if they will keep paying….

On Wednesday, S&P Global Rating issued a default rating on Venezuela’s bond due 2020 after it failed to pay $45 million due to bondholders within a 30-day grace period. The firm said the sovereign is now in overdue for payments on eight different bonds.

Venezuelan Bonds Bake In Permanent Default [WSJ]

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Author: Edward Lott

Edward Lott, Ph.D., M.B.A. is president and managing partner of Allentown-based ForLawFirmsOnly Marketing, Inc., a local search and digital marketing agency that offers clients lead generation, local seo and Google Maps Domination. Ed has been a digital entrepreneur since 1994, having discovered very early the opportunities the Internet offered. After having spent over two decades helping attorneys grow their practice, Ed joined the staff of ForLawFirmsOnly Marketing as President and Managing Partner, where he is expanding the agency’s cutting-edge services to the legal market. A true marketing futurist, Ed's vast experience working directly with attorneys has given him a unique perspective on law firm marketing not found in many other digital marketing agencies. Ed has reshaped the offerings of ForLawFirmsOnly to focus on growing law firms through a holistic approach to digital marketing evident in the reformulated lead generation processes now in place. Want to learn more about ForLawFirmsOnly Marketing, their lead generation programs, or just talk to Ed about his visions for helping law firms grow? Call him at 855-943-8736.

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