Venezuela Opposition Condemns Goldman Sachs Debt Deal

Nicolas Maduro Venezuela opposition lawmakers say police attacked them at demo
Venezuela opposition lawmakers say police attacked them at demo
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06 June, 2017

The move meant to eliminate a thorn in the side of embattled President Nicolas Maduro was reversed after three days - but its political fallout has now barreled into its third month roiling city streets across the country. And the death toll has mounted. That represents a 31% discount to other Venezuelan securities that mature in 2022, these people said, and implies an annual yield of more than 40%. Their path, however, is blocked by the armored vehicles and officers of the security forces.

While the discussions were under way in Washington, thousands of anti-government protesters took to the streets in Caracas again and tried to march to the foreign ministry.

Meanwhile, emerging market bond market participants familiar with Venezuelan debt said there was no effective secondary market for the bonds in question, which were first issued by the state-owned oil company PDVSA in 2014 and held entirely by the country's central bank until recently.

The assembly has now also asked its counterpart in the U.S. to investigate the sale, which it said made the bank complicit in the human rights abuses committed by the Maduro government.

"We are invested in PDVSA bonds because, like many in the asset management industry, we believe the situation in the country must improve over time", the company said in a statement, noting that many people hold such bonds in their mutual funds or investment accounts.

Julio Borges, leader of the opposition-heavy National Assembly, did not accept this explanation.

A Japanese investment bank has admitted it was part of a controversial deal with Goldman Sachs to buy Venezuelan government bonds.

"It is apparent Goldman Sachs decided to make a quick buck off the suffering of the Venezuelan people", he added.

"Given the irregular nature of the transaction and the absurd financial terms", Borges said he would recommend that any future democratic government "not recognize or pay those bonds".

The opposition-controlled Congress also voted on Tuesday to ask its U.S. counterpart to investigate the deal.

And dictatorships run this badly need a lot of tear gas.

"They say we're paid to be here, but that's a lie, because if not, I wouldn't be so short of money!" she joked.

Robayo said the troops beat him as they sought to prevent him taking pictures of clashes between demonstrators and the National Guard on Caracas' Francisco Fajardo highway.

Venezuela's opposition called for weekend protests as Thursday's deadline neared for candidates for an assembly to re-write the constitution - a gathering opponents slam as a naked power grab by the leftist government.

GSAM has defended the purchase, stating it did not directly interact with the Venezuelan Government and acknowledged the country's current crisis.

Why they are buyers is simple: the bonds are cheap, they are able to buy them, profits are likely and they seem to have concluded that the reward outweighs the risk that at least some bonds will meet with default given the economic and political upheaval predicted for the troubled Latin American country.

The OAS meeting at the group's headquarters in Washington, however, was suspended because members could not agree on how to handle the Venezuelan crisis - a development that Foreign Minister Delcy Rodriguez celebrated as a victory.


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