Venezuela Default a Sideshow as Bond Investors Hold Out Hope
- S&P cuts the sovereign’s credit rating after delayed payments
- But most bond investors stand pat believing money on its way
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Venezuela and its state oil company are now officially in default. It changes nothing for bondholders.
The declarations in the past 24 hours by S&P Global Ratings, Moody’s Investors Service and Fitch Ratings only confirmed what they already know -- PDVSA and the government are late on debt payments amid an unprecedented cash crunch and difficulties getting money through the chain of intermediaries. They’re well aware that holders of credit-default swaps are seeking to trigger payments on their insurance contracts, but that’s a $1.6 billion market that pales in comparison to the $60 billion of bonds that circulate among traders.