-- The political turmoil unleashed by Venezuela’s presidential election is threatening to extend the nation’s economic isolation and derail any moves toward restructuring its debt.President Nicolas Maduro’s declared victory in Sunday’s vote set off an escalating conflict, with the opposition alleging fraud and his government claiming its rivals tried to sabotage the election.
Venezuela’s 2027 bonds slipped 2.3 cents to 19.5 cents on the dollar, the lowest in nearly four weeks, according to indicative pricing data collected by Bloomberg. PDVSA bonds also fell, with notes maturing in 2026 losing 2.2 cents to trade around 12 cents on the dollar. The US, which has Maduro and several Venezuelan officials under sanctions, was quick to express doubts about the official tally. Some left-wing governments in Latin America also refrained from endorsing the results, with Chile’s Gabriel Boric saying “they were hard to believe” and Colombian Foreign Minister Luis Gilberto Murillo requesting a full recount of the votes to “dispel any doubts.”
Markets widely expected Maduro to stay in power, pricing in only about a one-in-three chance of the opposition winning in the lead up to the vote, according to Barclays estimates. But major evidence of fraud would put pressure on its bonds by stanching Venezuela’s efforts to repair its international standing.
“I don’t see any likely restructuring if there is no recognition of the result and at the moment and we don’t know yet what the international community thinks and what the US positioning will be regarding the result,” said Francesco Marani, head of trading at Spanish investment firm Auriga Global Investors, which holds Venezuela debt.