Venezuela’s Opposition Hires Debt Adviser

(Argus, 20.May.2019) — Venezuela’s political opposition contracted with an international adviser to prepare for restructuring the country’s external debt that is expected to exceed $150bn.

Lee Buchheit, a specialist in sovereign debt restructuring, will assist the self-proclaimed interim government of Juan Guaido, the head of Venezuela´s opposition-controlled National Assembly who is recognized as interim president by most western countries.

Buchheit´s credentials feature debt restructurings for Greece and Iraq. He will advise Venezuela´s opposition on a pro-bono basis following his retirement earlier this year from the law firm of Cleary Gottlieb Steen and Hamilton in New York.

Ricardo Hausmann, the Harvard University professor, former Venezuelan planning minister and opposition-appointed governor to the Inter-American Development Bank, lauded Buchheit´s appointment. “Resolving the colossal stock of liabilities left by the Chavez/Maduro regimes will be one of the most complicated assignments in the history of sovereign debt restructuring,” Hausmann said. “The interim government is committed to recruiting a world class team of advisers to assist in that process.”

President Nicolas Maduro has so far overcome political, diplomatic and economic pressure to step down, but the opposition is taking steps to prepare for an eventual political transition.

The opposition last week initiated payment of $71.6mn in interest on a 2020 bond issued by Venezuelan national oil company PdV. The money to pay the bond interest came from PdV funds that were frozen by the US Treasury and cleared for the opposition by the Treasury´s Office of Foreign Assets Control (Ofac).

The 2020 bond, which is backed by the indirect parent of PdV´s US refining arm Citgo, is the only financial instrument not currently in default. The opposition paid the interest to ensure that the asset would not fall into the hands of creditors. Numerous companies continue to seek access to Citgo shares in US courts to satisfy arbitration awards against the Venezuelan government.

The National Assembly’s decision to pay the interest on the 2020 bond is “an act of good governance,” US secretary of state Mike Pompeo said.

If Maduro remains in power, the opposition could come under pressure to make a principal and interest payment of $913mn on the PdV 2020 bond due in October 2019.

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