Last week, at the invitation of President Nicolás Maduro, a group of international financiers flew to Caracas to begin what has been called the world’s most complicated debt restructuring, also one of its biggest, and certainly one of the strangest. In a capital city blighted by the highest homicide rate in the world, investors filed into a white ice-cream cake of a building opposite the Presidential Palace. Heightening the unreality of a socialist economy underpinned by the world’s largest oil reserves, but mismanaged into near-collapse, the government rolled out a red carpet for its guests and laid on a ceremonial guard. Venezuela seeks a “win-win” solution for all, Tareck El Aissami, the vice-president, told the investors.
The country would continue to service its $150bn of foreign debt, the 43-year-old socialist militant stressed — although rating agencies issued a slew of default notices even as he spoke. The speech ended half an hour later. Participants left with gifts of coffee and fine chocolate, but none the wiser. The government, meanwhile, declared the meeting a success. “We’re all just trying to figure out if there is a method to the Venezuelan madness,” says Peter West of boutique advisory EM Funding. “If you are a little confused . . . don’t feel bad,” added Russ Dallen of Caracas Capital, a Venezuela debt specialist.
In part, the confusion stems from the complexity of Venezuela’s debts, which have been issued by various entities, with varied legal clauses, to multiple parties. It owes $64bn to bondholders, more than $20bn to allies China and Russia, $5bn to multilateral lenders such as the InterAmerican Development Bank, and tens of billions to the importers and service companies that keep the all-important oil industry pumping and the regime afloat.