Is Venezuela no-kidding within hours of default?

Is Venezuela no-kidding within hours of default?

[Ed. – It seems unlikely that no one will step in and come up with a last-ditch plan to stave default off for another grace period.  If it’s Russia in the lead, presumably Moscow will end up owning more Venezuelan resources and infrastructure.  Emphasis in original.]

This past weekend, Venezuela failed to make $237 million in bond coupon payment, blaming “technical glitches” when in reality it simply did not have the money (or wish to part with it). Adding the $349 million in unpaid bond interest accumulated over the past month as of last Friday, that brings Caracas’ unpaid bills to $586 million this month… And, as BofA sovereign debt analyst Jane Brauer writes, while the bank’s base case assumption is that Venezuela will make its debt service payments this year, “the probability of a short term default has increased substantially with coupon delays” and it could come as soon as this Friday, when an $842 million PDVSA principal plus interest payment is due, and which unlike typical bond payments does not have a 30 day grace period but instead is followed by a second $1.1 billion PDVSA coupon on Nov 2, also without a 30 day grace period. …

As we keep track of missed payments …

The concern is that the principal payments coming up have:

  • No grace period in the bond indenture for an event of default
  • Three business day grace period before triggering CDS

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The concerning principal due dates are coming up, the first of which is this coming Friday, which means in less than 48 hours Venezuela could be in default unless it can find $842 million

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