Venezuelan Oil Company PDVSA at Risk of Defaulting without Citibank Payments

By: Karina Martín - Sep 5, 2016, 1:32 pm
Venezuela could suspend the payment of external debt, "unchaining a cascade of events that could further destabilize the country" (el venezolano)
Venezuela could suspend the payment of external debt, unchaining a cascade of events that could further destabilize the country. (el venezolano)

EspañolUnited States-based bank Citibank, N.A. has notified Petroleos de Venezuela S.A. (PDVSA) that it is going to stop payments, which some say could cause the Venezuelan company big problems.

“Losing the main party responsible for paying the debt would lead to a default in PDVSA,” announced Stratford, a firm specializing in investment.

Stratford also explained that though Venezuela has lived with the phantom of default for years, the government has always shown its willingness to fulfill its commitments to investors; however, it has only been possible because imports were minimized to ensure resources were available.

Venezuela may suspend payment of foreign debt, “triggering a cascade of events that could further destabilize the country” Stratford continued.

The company has been struggling to get an international bank to provide all services necessary to carry out such a responsibility. Things look even worse now that Citibank has resigned its responsibility of making payments to various bonds issued by the state oil Venezuela (PDVSA).

In addition, PDVSA must pay a depreciation of approximatley US $2 billion of the 2017 bond, and having no paying agent make operations difficult.

Failure to pay bondholders could eventually lead to a restructuring of the debt, but PDVSA, which uses credit to cover operating costs, would likely suffer a loss of production because lenders could be less determined to extend the credit line to a bankrupt company.

If production falls,”it could exacerbate the country’s instability. Currency flows for public finances, which are crucial for paying for imports of food and other necessities, would be reduced, thus intensifying the extreme inflation and creating more social discontent.

PDVSA must fulfill its commitments in times of low oil prices and a sharp economic crisis that looks to further complicate the situation.

Stratford said that Venezuela has “few options for funding beyond their existing foreign exchange reserves” and that “the drop in cash flow is the main problem that undermines the privileges of the ruling elites in Venezuela, especially by the decline in imports, which means less corruption and food shortages. ”

Source: El nacional

Karina Martín Karina Martín

Karina Martín is a Venezuelan reporter with the PanAm Post based in Valencia. She holds a bachelor's degree in Modern Languages from the Arturo Michelena University.

In Madrid, Marches Against Maduro Silence Podemos Party

By: Ysol Delgado - Sep 5, 2016, 11:53 am
Madrid is one of the cities in the world with the most Venezuelans expats. (RTVE)

EspañolAfter a massive protest in Caracas, at least 4,500 Venezuelans took to the streets in Madrid to support the recall referendum that could remove Nicolás Maduro from office. The main opposition party, the Democratic Unity Roundtable (MUD), organized the march in Venezuela September 1 where an unofficial count had 1.5 million people participating. Read more:  Despite Government Obstacles, Over a Million Venezuelans March on Caracas Read more: Venezuelan Regime Prevents Buses from Reaching Caracas for Opposition March Lora Monroy is a Venezuelan who has been living in the Spanish capital for 13 years and reportedly said during the march, "There's no drugs, no food, the elderly have to get up at dawn to wait in line." The march held in Madrid was supported by three of the four main parties in the country: the Popular Party, the PSOE and the Citizens Party; however, the leftist Chavista Podemos Party hasn't commented on the matter. Popular Party Secretary of International Relations José Ramón García Hernández said Democrats like him are struggling to "defend the freedom of Venezuela." Deputy of the Liberal Group and Vice President of the Human Rights Subcommittee of the European Parliament Beatríz Becerra said Venezuela's continued harassment and imprisonment of its political opponents must end. "Shortages and deaths from lack of health care also continue to grow," said Becerra. The European Union is reportedly demanding that Maduro respect constitutional mandates, including the recall referendum. Spokeswoman for Help Venezuela Eva Sanchez accused Maduro of "doing what he wants" and of rejecting humanitarian aid. In Barcelona and the Canary Islands, the voices of protesters were also heard. Approximately 500 people gathered in Santa Cruz de Tenerife and Gran Canaria with the purpose of the recall and demand the release of political prisoners. Venezuela, dependent on oil revenue, is suffering economically as a result of the collapse of oil prices. Source: El Nuevo Herald y Prensa

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