Lisa Abramowicz is a Bloomberg Gadfly columnist covering the debt markets. She has written about debt markets for Bloomberg News since 2010.

It's not hard to find an investor who owns Venezuelan bonds.

Anyone who has allocated money to a broad emerging-markets debt fund probably has exposure to this nation, which is mired in a civil crisis that's left much of the population without enough food to eat.

That's important because Goldman Sachs has become the focal point of anger about investing in the distressed nation's debt. The Wall Street Journal reported on Sunday that Goldman Sachs Asset Management purchased $865 million of bonds from the Venezuela state oil producer Petroleos de Venezuela, igniting a firestorm of protest. Venezuela's opposition to President Nicolas Maduro threatened to not repay the debt. Demonstrations were held at Goldman Sachs's headquarters.

But Goldman has some good company if protesters and critics are looking for what they see as profiteers from misery.

Venezuela's debt accounts for about 2.4 percent of the $11.6 billion emerging-markets debt exchange-traded fund that trades under the ticker EMB. This ETF's assets have swelled by 45 percent so far this year alone, with investors piling in to take advantage of its 6.5 percent rally in the broader developing-nations index.

Huge Growth
The biggest emerging-markets debt ETF has experienced a surge of inflows this year
Source: Bloomberg

The country's debt has been a big contributor to 2017's emerging-markets gains, with its dollar bonds returning 8.5 percent year to date, according to Bank of America Merrill Lynch index data. Fidelity Management and BlackRock Inc. are some of the nation's biggest investors.

Widespread Ownership
Many big investors own Venezuela debt, especially if they own broad emerging-market bond funds
Source: Bloomberg, filings

Venezuela's debt is so controversial because many have accused the current administration of siphoning money away from food imports to meet interest and principal payments on the country's $47 billion of external debt. Ricardo Hausmann, former planning minister in Venezuela and current Harvard University professor, recently called the nation's debt "hunger bonds."

He recently proposed removing the nation's bonds from JPMorgan Chase & Co.'s broad benchmark emerging-market bond indexes, which are a popular peg for many mutual funds. That way, he reasoned, fund managers wouldn't have to decide whether to essentially endorse the current president and his actions, which have been condemned by human rights activists.

For now, the nation's debt is incredibly alluring to many investors at a time of ultra-low yields in developed nations. Its 10-year bonds are paying more than 20 percent yields, and the debt trades at steep discounts. Goldman, for example, paid 31 cents on the dollar for the debt it reportedly just bought, which was first sold in 2014.

High Yields
Investors have gravitated toward Venezuela's bonds because they've been paying high yields
Source: Bloomberg

And the government has, so far, avoided a default, albeit perhaps by depriving its citizens of much-needed resources. Venezuela is clearly in crisis right now, with protests leaving behind a growing trail of fatalities and citizens losing an average of 19 pounds in a year, according to one study.

The acceptance of lending to Venezuela's government has been institutionalized, and it has come with hefty rewards. If protesters are looking for investors as complicit as Goldman in the country's suffering, they are going to need a lot more signs.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Lisa Abramowicz in New York at

To contact the editor responsible for this story:
Daniel Niemi at