Many publications are reporting today on Venezuela’s record-high debts, including those owed to Russia and China. In particular, the Financial Times reports, citing informed sources, that in the coming weeks Caracas will provide creditors with full information on the state of public finances. The total amount of debt is expected to be significantly higher than previous market estimates, which ranged from $150 billion to $200 billion. As a result, the ratio of public debt to GDP will exceed 200%, the article states.
The country’s interim leader, Delcy Rodríguez, hopes to reach an agreement with creditors by the end of the year, the FT reports.
Centerview Partners, an American investment bank hired by the Venezuelan government as a financial advisor, helped develop a plan to restore the sustainability of the country’s public debt. According to the publication, this document is scheduled to be released in early July.
What is unusual for a restructuring of this scale is that the debt sustainability analysis was not prepared by the International Monetary Fund. At the same time, some representatives of the Venezuelan opposition fear that an accelerated restructuring without IMF involvement could weaken the country’s position in negotiations with bondholders, the FT reports.
As the publication notes, the Venezuelan case could surpass Greece’s $200 billion default during the 2012 eurozone crisis. Experts already consider the upcoming restructuring to be more complex than any previous cases, due to the diversity of Venezuela’s debt obligations and the prolonged period of default on payments to creditors.
According to the FT, the largest confirmed portion of the debt consists of bonds issued by the government and the state-owned oil company PDVSA: their value is estimated at approximately $60 billion, to which is added about $40 billion in interest accrued since the default. This amount increases by about $5 billion annually, the article states.
According to investor estimates, Venezuela also owes between $30 billion and $50 billion to oil companies and commercial creditors in unpaid bills, and another $20 billion or more is in court-ordered compensation to companies whose assets were nationalized under the Hugo Chávez regime.
In addition, according to the FT, the country reportedly owes China $10–20 billion in loans that were previously serviced through oil exports but for which payments are believed to have been suspended. The debt to Russia is estimated at approximately $6 billion, and another $4 billion or so is owed to international development banks.
