Two-Cent Venezuela Bonds Lure Traders Hunting Lottery-Like Score
- European, Latin America funds are taking a flyer on the debt
- Payoff could be enormous when notes finally get restructured
A stack of old Bolivar banknotes in Caracas, Venezuela.
Photographer: Gaby Oraa/BloombergThis article is for subscribers only.
It’s one of the most outlandish bets in global credit markets: Buying up defaulted bonds sold by a country under sanctions that leave US investors locked out of the market.
Yet, for traders willing to take on the risk, there’s simply too much money to be made to pass up debt that trades for as little as 2 cents on the dollar. Somewhat akin to buying a lottery ticket, a handful of Latin American and European funds are dipping their toes into Venezuelan securities, encouraged by signs of thawing tension between Washington and Caracas.