Goldman Sachs USD2.8 Bn Venezuelan bonds purchase creates uproar

06 June, 2017, 05:30 | Author: Essie Rivera
  • Reuters     
       Venezuela has been wracked by daily street demonstrations over the past two months with dozens killed

Regardless, there's surely more that America could be doing to alleviate the humanitarian crisis in Venezuela. Since 2013, its economy has shrunk 27 percent and its food imports have dropped by 70 percent, the Wall Street Journal reported earlier this year.

"If they change because of political regime change ... there can be a bump to the value of ... those bonds if there is a more fundamental opposition coming in, which is what I believe Goldman Sachs is betting on", she said.

"For all of those who always doubt him, for those who are shocked by political audacity, today we can say Nicolas was right to call the Constituent Assembly, which is to say, to call on the power of the people", said Elias Jaua, president of the Constituent Assembly.

The bonds, held by Venezuela's central bank, weren't released to the public after lack of investor interest in bonds of this struggling country.

"Tonight, millions of venezuelans will go to bed hungry and without the possibility of obtaining the medicines that they need, or exhausted and bloody following their legitimate peaceful protests for democracy and the right to vote, as victims of a brutal regime that Goldman Sachs made a decision to support", he continued.

USA officials also said Venezuela's government may not be able to depend much longer on deals like the one with Goldman Sachs.

"We recognise that the situation is complex and evolving and Venezuela is in crisis".

Nearly 60 people have died in protest-related violence since 1 April. It got $3 billion-worth of bonds for about a third of the price.

The move led the leader of Venezuela's National Assembly, Julio Borges, to threaten that a later government may refuse to honor the bonds .

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Mr Maduro says the protests are a violent attempt at a coup and insists the country is the victim of an "economic war" supported by Washington.

Many of those foreign leaders, for their part, plan to meet Wednesday to discuss a possible way forward in negotiating with Maduro's government.

"Given the irregular nature of this transaction and the absurd financial terms involved that are to the detriment of Venezuela and its people, the National Assembly will soon launch an investigation into the matter", he added.

One U.S. broker deeply involved in trading Venezuelan securities told Thomson Reuters IFR that fair value for the bonds should be around 44 cents to 46 cents on the dollar, based on where other bonds issued by PDVSA and the Venezuelan government were trading on Tuesday.

Goldman didn't comment on Borges' letter.

Angel Alvarado, another opposition lawmaker who is a member of the country's congressional finance committee, said that Goldman was making "a grave reputational error".

"It may get them through the day", a senior USA official said Tuesday, "but the longer-term consequences seem to be quite damaging for the institutions as well as for the society".

In New York Wednesday, Venezuelan Foreign Minister Delcy Rodriguez said Maduro's opponents should feel "deeply frustrated" that the US -led plan to intervene in Venezuela's crisis had failed.

The U.S. State Department is trying to persuade countries across the Americas to pressure President Nicolás Maduro into reinstating democratic norms after he tried to dissolve Congress.

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