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The Case for Venezuelan Bonds

As default looms, some emerging-markets bond managers are cautiously hanging on.

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Venezuelan President Nicolas Maduro’s mismanagement of state-run oil company Petroleos de Venezuela (PDVSA) has led to a crippling recession and shortages of food and medicine that have sparked massive protests this year.

During the summer, Maduro's takeover of the legislature led to U.S. sanctions on trading newer bonds and dividend payments from Citgo (PDVSA’s U.S. oil refinery arm) back to Venezuela. In addition, a U.S. court’s decision to allow a Canadian company to seize Venezuelan assets at BNY Mellon further constrains the country’s access to cash and may spur further lawsuits that could chip away at its reserves.

Karin Anderson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.