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Morning Commentary: U.S. trading of Venezuela bonds stops after sanctions are extended
By Rebecca Melvin
New York, Feb. 4 – Trading of Venezuela’s bonds by U.S. persons has come to a halt after the U.S. Treasury Department added the sovereign to its specially designated national list of people and entities that U.S. people cannot do business with, a New York-based trader said on Monday.
The department through its Office of Foreign Assets Control banned last week trading of the bonds of Petroleos de Venezuela SA, the state-owned oil company, by U.S. persons.
The same thing that happened to the PDVSA bonds has happened to the Venezuela bond. “I have no idea where prices are for Venezuela bonds. It’s like a black box,” the trader said on Monday. “I would imagine they are lower, but I have no way of knowing.”
As of Friday, most of the Venezuela sovereign curve has been in the low to mid 30s. Pricing had lifted 10% to 15% since Venezuela’s National Assembly president Juan Guaido declared himself president of the country last month.
As far as how long the Venezuela and PDVSA bonds will remain on the Treasury’s restricted list, the trader surmised that “it will take as much time as Maduro is in power,” and there is really no way of knowing whether he will hold on two weeks, two months or two years.
The trader was referring to Venezuela’s Nicolas Maduro, who still resides in the Miraflores presidential palace and has been president of the country since 2013. But the United States and many other governments have said they no longer recognize Maduro as an outcry against him has grown.
“Everything regarded as international, [Guaido] controls as this point. The international community is supporting him. Locally, it’s harder because the army is with Maduro,” the trader said.
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