A LOOK AT RECOVERY ESTIMATES FOR VENEZUELA – GWC Mag

To assess the restructuring outcome of a country’s defaulted USD bonds, one needs to take into account its current and future fundamentals. In the case of Venezuela, these have changed substantially over the past 10 years: oil production has fallen by ~70%, and GDP per capita by ~80%. This suggests that any recovery value estimates of Venezuela’s debt would have changed significantly since the initial default in 2017, and future recovery estimates will be highly dependent on the trajectory of Venezuela’s oil production and, by extension, economic recovery.

In addition to the uncertainty around Venezuela’s economic outlook, the overall level of debt outstanding remains unclear given limited data availability. From the bonds and multilateral debt outstanding, we can infer that Venezuela and its government-related entities have ~$99bn outstanding (including accrued interest). In terms of bilateral debt, suppliers, ongoing litigation and ‘debt for oil’ contracts, various sources suggest that the debt outstanding could amount to an additional ~$48bn, although this may be as high as ~$78bn. This would place the total external debt of Venezuela and its government-related entities (primarily PdVSA) in the range of ~$148bn-$177bn.

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