Chavez Windfall for Bondholders Means 60% FertiNitro Return

Venezuelan President Hugo Chavez, who says that capitalism is “ruining the world,” is handing bond investors a windfall by nationalizing a chemicals company.

Dollar notes from FertiNitro, the joint venture operated by Koch Industries Inc. and state-run chemical company Pequiven, returned 60 percent since the nationalization in October 2010. Yields on the securities have dropped 6.29 percentage points to 8.35 percent since then as bondholders argued that the seizure triggered a clause requiring a payout above face value. The government offered on Nov. 22 to buy back the notes at 105 cents on the dollar, up from 68 cents the day before the takeover.