PDVSA Bond Traders Ensnared as Debt Ban Threatens Default

Trading in bonds issued by Venezuela’s state oil giant PDVSA ground to a halt Tuesday after the Trump administration included the securities in sweeping sanctions against Nicolas Maduro’s regime.

The measures forbid U.S. citizens from buying the debt on the secondary market, leaving them with two options: sell to someone abroad or hang on to the notes. Yet ambiguity from the Treasury Department is leading some investors outside the U.S. to also refrain from trading them, according to Cecely Hugh, investment counsel in emerging-market debt at Aberdeen Standard Investments in London. She said a strict interpretation could imply that firms with U.S. employees would also be restricted.