Default Day in Venezuela

[GatoGordo]

¡AL BORDE DEL DEFAULT! Venezuela enfrenta HOY “jornada crucial” con acreedores (ON THE EDGE OF THE DEFAULT! Venezuela faces TODAY "crucial day" with creditors)

DolarToday / Nov 13, 2017 @ 11:00 a.m.

Translation from Spanish

Venezuela will hold a crucial meeting with creditors in Caracas on Monday to discuss its plan to renegotiate the foreign debt, while bondholders will analyze the delay in payments in New York, amid strong fears of a default.

President Nicolás Maduro assured that Venezuela will never declare itself in default. "They have played for Venezuela to declare itself in default. Never! The default will never reach Venezuela. Our strategy is to renegotiate and refinance all the debt, "he said on Sunday.

Analysts predict little success in the meeting because US sanctions against Venezuela prohibit its investors from negotiating Venezuelan debt and 70% of bondholders are American and Canadian. In addition, Maduro appointed Vice President Tareck El Aissami and Finance Minister Simón Zerpa as top negotiators, whom the United States sanctioned and forbade its citizens to deal with.

-snip-

https://dolartoday.com/al-borde-del-default-venezuela-enfrenta-hoy-jornada-crucial-con-acreedores/

[Fred Sanders]

1. So if not for American meddling the debt could be refinanced? Which is not uncommon in commerce.

[GatoGordo]

2. Renegotiated debt takes two willing partners

Maduro WISHING he is going to renegotiate debt to stave of default, and his debt holders actually renegotiating that debt are two entirely separate things. To quote Burgess Merideth, "You can wish in one hand, and crap in the other, and see which gets filled first".

The debt holders are not forbidden to sell their debt, nor to renegotiate that debt. They just can't use US credit institutions to prop up the Stalinist regime in Venezuela. Nor can they negotiate with the narco-thug Tarek El Aissami.

FWIW, it isn't the US's fault that Maduro is defaulting. Chavismo has been a financial shambles since its inception in 1999.

[Fred Sanders]

3. Shambles after 1999 same as the shambles before. Back on topic, the American sanctions

threatened on debt holders helps Venezuela how?

[GatoGordo]

4. How familiar are you with Venezuela pre-1999?

Venezuela was the envy of Latin America. A thriving middle class (homes, autos, vacations), excellent public schools, and even poor families were sending their children to college (paid for by oil). Low cost public transportation. Adequate government healthcare.

The sanctions are on Venezuela's thugs. Vlad. Diosdado. Aristobulo. Elias. Delcy. Nicky. Tarek. The hierarchy that promised them Swedish-style socialism, but delivered Cuban despotism and misery.

What Maduro wants to do is absolve Chavismo from the responsibility to repay what they have squandered. By "renegotiating", he wants to delay the inevitable. And the sooner the Venezuelan people are rid of Chavismo, the better they will be.

FWIW, american debt holders can negotiate with Venezuela, providing the AN approves. (But Maduro refuses to recognize the democratically elected AN.)

[MyNameGoesHere]

8. Oh my.

Yes they were the neo-liberals wet dream. So that's a shining example I suppose if you're into that kind of thing.

[GatoGordo]

16. That pre-Chavismo Venezuela was far superior to Chavista Venezuela?

You don't have to be a rocket surgeon to figure that out. While Venezuela had the same problems as many Latin American countries, it offered a Hell of a lot more than most.

Low cost public transport.
Cradle to grave healthcare.
Government education (including no cost university education)
Food and medication.

But, for the water carriers of Chavismo, all this was smoke and mirrors, I suppose. Because now, Chavismo offers:

Crumbling transportation. Few buses running. Crumbling bridges and tunnels.
Horrific healthcare (children malnourished, no doctors/nurses, no supplies, horrible facilities)
Empty schools. No teachers.
No food (people eating from garbage dumpsters is now the norm) or medication (no aspirin? Insulin? Antibiotics? Birth control?)

How is that for nostalgia?

[MyNameGoesHere]

19. You're history is a few years

Where as mine spans centuries. I could have cherry picked the massacres of 1958 and used it as an example of how horrible Venezuela was before, but I prefer to be honest.

[IAmTheNight]

5. Citation needed.

Also, propaganda sites like VenezuelaAnalysis or the Putin-puppet RT will not be taken seriously.

[Fred Sanders]

6. Here ya go...some remember history, some choose to suppress:

caused many of the problems.[38] By the mid-1990s under President Rafael Caldera, Venezuela saw annual inflation rates of 50-60% from 1993 to 1997 with an exceptional peak in 1996 at 99.88%.[36] The number of people living in poverty rose from 36% in 1984 to 66% in 1995[39] with the country suffering a severe banking crisis (Venezuelan banking crisis of 1994). In 1998, the economic crisis had grown even worse. Per capita GDP was at the same level as 1963 (after adjusting 1963 dollar to 1998 value), down a third from its 1978 peak; and the purchasing power of the average salary was a third of its 1978 level.[40]

https://en.m.wikipedia.org/wiki/Economy_of_Venezuela

[IAmTheNight]

7. And today's a thousand times worse under Chavista rule

Or are you gonna deny reality?

[Fred Sanders]

9. A thousand times, ya don't say? I answered your request...now you are upset...I get it.

[GatoGordo]

10. Inflation in ChavismoLand LAST MONTH was over 50%.

It is over 50% so far THIS MONTH.

[sabbat hunter]

13. Chavez

was initially successful in Venezuela because oil prices skyrocketed. Once those prices collapsed, the economy collapsed. It was solely reliant on that one industry. That is not a path for success for any country.

[IAmTheNight]

20. And not only that, but the Chavista leadership decided to hoard most of the oil revenue

Only need to see the personal wealth of the whole Chavez family and all the higher-ups in the PSUV party. Doesn't take a genius to notice. It's pretty easy to see with all the extravagant vehicles, clothes, accessories, and parties that these people have.

[GatoGordo]

21. Delcy looks very fashionable in her Ferragamo shoes and Hermes scarf

and the Gucci handbag... total knockout look for a night out in Caracas... eating at the dumpsters with the common folk she purports to represent.

[sabbat hunter]

11. Only way he won't default

on Venezuela's debt is if China steps in and gives him US dollars to prop him up. Not an impossible scenario.

[GatoGordo]

14. Chavismo is on the hook for $15 billion to the Chinese

Last edited Tue Nov 14, 2017, 02:39 PM - Edit history (1)

$196 billion to all parties.

The Chinese are keeping mum on any "renegotiation of debt". The Russians are done loaning money and are taking control of state assets (Amuay refinery)

I doubt China has as much faith in Chavismo as Maduro would say they do. They (Chavistas) are about as corrupt as they come. Which is why Rosneft will assume control over Amuay instead of throwing more money down the Chavista rat-hole. China, I assume, will offer another grace period to Chavismo... for some more Venezuelan state assets.

Remember, the AN controls the purse. Not the ANC. Any debt incurred outside of the AN will not be honored, which is why this "renegotiation of debt" by Maduro is a fraud. Chavismo has nothing to offer debt holders.

[GatoGordo]

12. Winner winner, chicken dinner!

Today, the value of the Bolivar Fuerte (VEF, or Strong Bolivar) has devalued more than...

10,000,000%

Value of the VEF on February 1999 = .567
Value of the VEF today (DolarToday) = 57,379

10,119,753% (over a million percent increase in the last week)

All that the Chavistas ask is a little bit of forbearance, and they can straighten it out...

[GatoGordo]

15. It's official

S&P declara en “default” deuda venezolana en divisas
(S & P declares Venezuelan debt in foreign currency "default&quot
DolarToday / Nov 14, 2017 @ 10:30 am

The US credit rating agency Standard & Poors (S & P) downgraded Venezuela's sovereign debt in foreign currency to "default" on Tuesday after it failed to pay interests in two of its commitments.

The rating agency announced that the decision is justified by the fact that the Venezuelan authorities did not pay 200 million dollars of the corresponding coupons of global bonds issued with maturities in 2019 and 2024.

The payment was not made after this weekend the 30 days of the grace period were fulfilled.

Consequently, it placed SD / D (selective default / default) sovereign debt of Venezuela in the long and short term in foreign currency, the company said in a statement.

-snip-

https://dolartoday.com/atencion-sp-declara-en-default-deuda-venezolana-en-divisas/

"Never! The default will never reach Venezuela!" Nick Maduro, Sunday, November 12, 2017

[EX500rider]

17. More:

"Yesterday Venezuela held a bondholders meeting in the capital. Only about a quarter of the 400-450 bondholders sent representatives and these appeared to show up more out of curiosity than anything else. Venezuela owes about $150 billion (most of it bonds) and most of the debt is held by banks and other financial institutions (mutual funds, pension funds and so on). The government sent out repeated invitations (via the Internet) for about a week in which it described a bondholders meeting that would feature government officials describing and discussing how Venezuela was going to restructure and refinance its huge debt. In the previous week significant fractions of that debt was declared in default and more is expected to follow. The bondholders meeting lasted about 30 minutes and largely consisted of the Venezuelan vice-president Tareck El Aissami blaming all the financial problems on the United States. Aissami has been accused of dealings with Hezbollah, Iran and drug gangs. He is a former interior minister who was appointed the successor to president Maduro in January. Since 2000 Iran and Hezbollah have been welcome in Venezuela and Aissami was part of that. The U.S. has sanctioned Aissami because of his drug smuggling activities. Aissami, or someone from the government, was supposed to show up and reassure bondholders but those who attended only left with gift bags containing samples of Venezuelan chocolate and coffee. President Maduro promised, as recently as the 12th, that Venezuela would never default on its debt and has offered to continue discussions in Venezuela with bondholder representatives. But at this point that is less likely than discussions among bondholders.

For Venezuela the worst aspect of this is the prospect of the state oil company bonds defaulting. About half the bond debt is connected with the state oil company and if any of those are declared in default bondholders can go to foreign courts for authorization to seize overseas assets of the Venezuelan state oil company. That sort of thing tends to work. Once that happens Venezuelan oil revenue drops sharply and so does what is left of the Venezuelan economy. China and Russia are trying to come up with some way to help but so far they have no workable plan either.

Venezuela recently revealed that oil production had hit a historic low, falling beneath two million BPD (barrels per day). September production was 2.085 million BPD while in October it was 1.955 million BPD and headed lower. Production has not been this low since 1989. Production averaged 2.373 million BPD in 2016 and 2.654 million BPD in 2015. The production decline accelerated in 2017 and is expected to fall to 1.6 million BPD in 2018. This is down from a peak of 3.5 million BPD in 1999, when the current government took power. The subsequent government corruption and mismanagement has devastated the Venezuelan oil industry and caused a decline in oil production that is headed towards unprecedented low levels. The production decline is continuing, because the government refuses to clean up the mess in the national oil company and the oil production facilities.

China has been a major lender and has provided about $50 billion since 2007. Most of these loans are repaid with Venezuelan oil. The amount of oil owed China increases as the oil price declines, which means Venezuela has less oil to sell for current needs. Because the socialist economic policies have driven most manufacturing, and even agricultural enterprises out of business nearly everything has to be imported. China fears that they may not see a lot of their loans repaid and are demanding more oil instead. In 2014 China was receiving over a third of Venezuelan oil exports and now that is nearly half. Currently China is owed $28 billion and Russia $8 billion. In late 2016 China agreed to invest $2.2 billion to upgrade Venezuelan oil facilities. To pay for this Venezuela agreed to increase shipments of oil to China from the 550,000 BPD (most of which is paying for past loans) to 800,000 BPD. That upgrade program never got started because China discovered the state oil company was a chaotic and corrupt mess. China and Russia see opportunities in Venezuela but they are complicated by the growing list of sanctions on Venezuela because of many crimes the government has been accused of. The government is trying to deal with this by staging a highly publicized anti-corruption campaign but this effort does not involve going after many, if any, of those triggering the sanctions (for everything from drug smuggling and money laundering to murder of general abuse of political opponents. Russia and China can block UN sanctions but not those coming from the U.S. and EU (European Union)."

https://strategypage.com/qnd/colombi/articles/20171114.aspx

[GatoGordo]

18. I have relatives (wife's extended family) still living in Venezuela.

They were once hard-core Chavistas, who bought the whole Stalinist paradigm hook line and sinker from Chavez. (Say what you will about the guy, but like most elected despots, he was charismatic) He promised them free this and free that. And who doesn't love free?

They are still believers, but they are also realists. Even they are fleeing. Maduro says, "These foods will be price controlled!" and the next day, those foods are no longer on the shelves. Maduro says, "Free public transit today!", and the next day, there are no buses or taxis or trains running. Maduro says, "I will nationalize businesses and give them to the people!" and the next day, these businesses fold, and the people become owners of a closed business. (Such as my in-laws concrete/cement business in 2003)

And what does Maduro promise "El Pueblo" for Christmas?

Free hams for Chavistas! (From where? He will confiscate them! And the CLAP will distribute them)
A 500,000 BsF bonus! (Carnet de la Patria, for Chavistas only. Worthless, actually)
And free toys for loyal Chavistas (Stolen again, from wholesalers in years past... only now wholesalers know better.)

Most of my in-laws are either in Panama, Columbia, Spain and the United States. The last non-Chavistas left in 2014. We have been very lucky.

[GatoGordo]

22. 13,000,000% and no end in sight

73,219 Bolivars per dollar. (source: DolarToday.com)

Since Chavismo, the Bolivar Fuerte has devalued 13,000,000%

9,000,000% last Saturday.
10,000,000% on Tuesday
13,000,000% today

Maduro says, "Nonsense! The Bolivar is pegged to the dollar at 10 VEF! This is all propaganda! There is no debt! There is no hyperinflation! Never! Venezuela will never default! There is no want or need! The Oligarchy is trying to make us look bad! They cannot win! The Bolivarian Revolution rolls forward!"

Next week? The 1,000,000 Bolivar bank note.... in case someone needs to buy an arepa.