47336
Venezuela to Repel Default
World Economy

Venezuela to Repel Default

Even as Venezuela’s economic collapse deepens, the nation has a good chance of getting through another year without defaulting on its bonds.
That’s the conclusion of money managers including Aberdeen Asset Management and Wall Street banks like JPMorgan Chase & Co., Bloomberg reported.
The cash-strapped country has been on default watch for the past two years as oil prices remain depressed, its economy implodes and political turmoil worsens amid an effort to recall the president. Yet Venezuela has managed to scrounge up enough money to honor billions in debt payments, and this year appears to be no different. Petroleos de Venezuela SA, the struggling state oil producer, has $4.1 billion of debt payments to make before year-end.
“We think they have sufficient resources to pay” $1.4 billion coming due in October, said Anthony Simond, a money manager at London-based Aberdeen Asset Management, which oversees about $10 billion of emerging-market debt. He owns notes due in 2016 and 2017 issued by PDVSA, as the oil company is known.
While he acknowledges the $2.7 billion of payments in November will be a “bit trickier,” he said President Nicolas Maduro wants “to avoid a default at any cost.” Oil Minister Eulogio Del Pino, who is also president of PDVSA, has said the company is in advanced talks to refinance debt due in the next 18 months.
Maduro’s hold on power is increasingly tenuous as worsening shortages of everything from food to medicine fan public discontent. Alberto Ramos, an economist at Goldman Sachs Group Inc., said in a July 22 note that the country has fallen into a “depression” with signs of hyperinflation, but is likely to make all its debt payments this year by drawing down international reserves.
The International Monetary Fund predicts gross domestic product will shrink an unprecedented 10% this year, while inflation will exceed 700%. On July 20, Alejandro Werner, director of the IMF’s Western Hemisphere department, said Venezuela will be home to the “worst growth and inflation performance in the world.”
Despite all this, JPMorgan analysts led by Ben Ramsey expect Venezuela to make good on debt payments.
“We remain of the view that willingness to pay is very high,” they said in July 27 note to clients. “And PDVSA has no intention of triggering a credit event.” To get by, Venezuela will count on a rebound in crude prices, its gold reserves and financing deals from China, according to Walter Molano, chief economist at BCP Securities LLC in Greenwich, Connecticut.

Short URL : http://goo.gl/AmDdDV
  1. http://goo.gl/YzxLgd
  • http://goo.gl/AymYub
  • http://goo.gl/X0twwp
  • http://goo.gl/YYjENv
  • http://goo.gl/YJWs9v

You can also read ...

Business confidence fell to its lowest level since August 2013 and around 7% of companies expected a contraction.
According to data from the International Monetary Fund in...
China Warned of Ballooning SOEs
Former chief of the World Bank Robert Zoellick cautioned China...
Shrinking unemployment in the US, Japan and the eurozone finally forces companies  to lift wages to retain and attract staff.
Workers in the world's richest countries are getting their...
New Zealand Q2 GDP Growth Picking Up
New Zealand’s economic growth is expected to have accelerated...
Saudi Sovereign Fund Secures $11 Billion Loan
Saudi Arabia's sovereign wealth fund said Monday it had...
Lira Eases Against Dollar
Turkey’s lira weakened against the dollar on Monday as...
By 2025 more than half of all current workplace tasks  will be performed by machines.
Robots will handle 52% of current work tasks by 2025, almost...
Myanmar Businesses Want Lower Taxes
Myanmar businesses are urging the government to lower the...

Trending

Googleplus