WTI Crude

Loading...

Brent Crude

Loading...

Natural Gas

Loading...

Gasoline

Loading...

Heating Oil

Loading...

Rotate device for more commodity prices

Alt Text

Germany, Austria Slam U.S. Sanctions Against Russia

Germany and Austria have slammed…

Alt Text

Saudis Foil Attack By Unknown Enemy On Offshore Oil Field

Saudi Arabia reportedly thwarted an…

Alt Text

$30 Oil Could Spark Contagion In Energy Markets

The risk of financial contagion…

Is Goldman Sachs Playing With Fire In Venezuela?

Venezeula

Goldman Sachs bought last week around US$2.8 billion bonds issued by Venezuela’s embattled state oil firm PDVSA, betting that a change in the Venezuelan regime could more than double the value of debt, The Wall Street Journal reported on Sunday, citing five people familiar with the deal.

According to the people in the know, last week Goldman’s asset management division paid US$0.31 on the dollar, or around US$865 million, for bonds that PDVSA issued in 2014 and that mature in 2022. The bonds had been held by the central bank of Venezuela, according to The Journal.

Due to Venezuela’s risk of default, bonds trade at deeply discounted rates and yields are juicy, at around 30 percent.

Goldman’s bond purchase is part of a strategy to increase positions in Venezuelan holdings, The Journal’s sources said. The U.S. bank hadn’t negotiated the bond purchase directly with the Venezuelan government, rather, it acquired the debt via an unnamed broker, according to three of the sources.

According to The Journal, a senior finance official in Venezuela confirmed that the transaction had taken place, but declined to share details.

Goldman’s deal comes amid rising unrest in Venezuela, as people protest President Nicolas Maduro’s regime. Since the beginning of April, more than 50 people have been killed in protest-related violence. The transaction also comes as Venezuela’s oil industry is crippled amid hyperinflation and a crisis so deep that people scramble to get food and medicine supplies. Related: Gold Demand Could Plunge As India Considers New Tax Policy

According to The Journal, Maduro’s detractors say that any bond purchase of Venezuelan bonds gives the regime much needed cash.

Goldman is putting itself on the wrong side of history with this deal,” opposition lawmaker Angel Alvarado told The Journal. Alvarado has described Goldman’s move as “a grave reputational error”.

Should an opposition-led administration take power, it would refrain from doing business with Goldman Sachs, Alvarado said.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News