U.S. trading of Venezuela bonds stops after sanctions extended; secondary market flat

By Rebecca Melvin

New York, Feb. 4 – Trading of Venezuela’s bonds by U.S. persons came to a halt on Monday after the U.S. Treasury Department extended sanctions to cover the sovereign’s international notes in addition to the bonds of Venezuela’s state-owned oil company, Petroleos de Venezuela SA, which U.S. persons were prohibited from doing business in last week.

The moves come as the United States and other countries step up pressure in an effort to remove Venezuela president Nicolas Maduro from power, asserting that the nation’s 2018 elections in which he was elected to another term last May were illegitimate.

The slow-moving crisis has left market players uncertain of what the future holds. Trading in the bonds of the debt-laden country, which was in default on many issues, had recently picked up in terms of volume and prices amid increasing expectations of regime change.

Elsewhere, the emerging markets debt secondary market was little changed, having completed a strong January, with currencies marking their biggest monthly gain in a year, and the primary market remained hushed. January saw a resurgence of demand in emerging market bonds including the likes of Indonesia, South Africa, India and Brazil, but investor concerns about high debt levels and other uncertainties seemed to keep issuers at bay.

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