Fly to Venezuela for Answers, Finance Head Tells Bondholders

Updated on
  • Venezuela holding meeting on Nov. 13 to discuss debt strategy
  • Investors ‘have to come to the meeting’ to hear details: Zerpa
RVX's Zucaro on Venezuela's Debt Overhaul Plan

Simon Zerpa, Venezuelan President Nicolas Maduro’s most powerful financial confidant and one of the officials tapped to help lead talks with bondholders on Monday, is keeping his poker face ahead of the crucial meeting in Caracas.

Acting as both the nation’s finance minister and chief financial officer of state-run oil firm PDVSA, Zerpa said in a rare interview late Wednesday that he doesn’t plan to share any further insight into the future of pending bond payments or strategies until the Nov. 13 meeting in Venezuela’s capital. Moody’s Investors Service called that day a “critical date” with expiring grace periods for interest payments acting as a backdrop to the meeting.

When asked if Petroleos de Venezuela SA intends to honor its debt obligations for the remainder of 2017, Zerpa told Bloomberg that investors “have to come to the meeting on Monday” to find out. “Here we are going to give information,” he said from Caracas. “Before that, I can’t offer more details.”

A self-taught diplomat and socialist financier, Zerpa sounded confident that bondholders would make the trek next week after the U.S. Treasury Department told investors they could go, as long as they proceed with extreme caution. Both Zerpa and Vice President Tareck El Aissami, who’s heading the negotiations, were sanctioned by Donald Trump’s administration, giving investors pause over engaging in talks and prompting concern among Wall Street compliance departments.

Other hurdles to assure a strong turnout include visa requirements, logistical difficulties from flights to security on the ground, and hesitation over providing details of holdings to a recently launched website dubbed “Sovereign Renegotiation.” Current sanctions would prohibit a classic debt restructuring.

Venezuela’s benchmark bonds due 2027 have tumbled to record lows this week, trading at 24 cents on the dollar, from 54 cents in January, after Maduro announced plans to renegotiate the country’s debt load, alternating between terms like refinancing and restructuring. The five-year implied probability of a PDVSA default climbed to 99.99 percent on Wednesday from 93.25 percent a year ago, according to credit-default swaps data compiled by Bloomberg.

The International Swaps & Derivatives Association has agreed to review on Friday a request to decide if a default event occurred due to delayed principal payments on the PDVSA bond due Nov. 2. BancTrust Securities Casa de Bolsa C.A., a Caracas-based investment bank, wrote in an emailed statement that it has been asked by a group of creditors to represent them at the Nov. 13 meeting. Zerpa said the Venezuelan government is responding to all inquiries about the debt talks sent to renegociacionsoberana@mppef.gob.ve.

"The meeting is going to be very good," he said in a message to Bloomberg on Thursday. "They should come to talk."

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