• Tolling agreement needed to prevent litigation, group says
• Standstill offered by Maduro has no standing in US courts

Nicolle Yapur, Bloomberg News

CARACAS
EnergiesNet.com 05 16 2023

A group of holders of Venezuela’s defaulted bonds called on the US-recognized opposition to endorse an agreement to suspend the statute of limitations on the debt.

The Venezuela Creditors Committee, made up of investors holding around $10 billion of the country’s $60 billion sovereign and state oil company bonds, said in a statement that suspension of the statute is needed to avoid litigation. The statute is set to expire on some bonds in October — six years after Caracas stopped payments on the debt — meaning creditors face losing their right to pursue repayment in court. 

Supporting an extension “not only aids in protecting Venezuela’s vital assets but also paves the way for a more comprehensive and sustainable resolution to the pressing debt issues,” the committee members wrote. Firms including Fidelity Management & Research, T. Rowe Price, Mangart Capital Advisors, Greylock Capital Management, and Grantham, Mayo, Van Otterloo & Co. have been part of the group.

Venezuela defaulted on debt starting in 2017, two years before the US cut ties with President Nicolas Maduro’s government and imposed a ban prohibiting US investors from buying country’s debt. Government bonds trade around 10 cents on the dollar while those issued by the state oil company, PDVSA, trade for less than 4 cents.

Maduro offered to suspend the statute of limitations in March, but his proposal is not enforceable because US courts do not recognize his government. Meanwhile, the opposition’s National Assembly was recently granted authority by the US to represent the country in negotiations with creditors, ending the legal void created by the removal of Juan Guaido as interim president in January.

Read more: Venezuela Offers to Suspend Deadline on $60 Billion of bonds

Some creditors approached the Guaido administration last year with a tolling proposal but didn’t receive a response. The newly appointed opposition National Assembly hasn’t said whether it’s now considering it. 

Members of a council created to manage the country’s assets abroad didn’t immediately respond to a request for comment.

“Choosing not to toll does not reduce the overall debt stock,” the committee wrote in the statement. “The bonds continue to exist, to accrue interest, and bondholders retain their voting rights. This can influence the outcome of any potential restructuring.”

— With assistance by Andreina Itriago Acosta

bloomberg.com 05 15 2023