In a strategic move toward the restructuring of Venezuela’s substantial international debt, a consortium of bondholders has enlisted the legal services of Orrick, Herrington & Sutcliffe. This development marks a significant step in addressing the financial turmoil stemming from Venezuela’s 2017 default on international debt obligations, which, along with the state oil company PDVSA, has amassed an estimated $60 billion in unpaid debts.
The Venezuela Creditor Committee (VCC), representing the interests of these bondholders, is spearheading the restructuring initiative. Key members of the VCC include prominent asset managers such as Grantham, Mayo, Van Otterloo & Co. LLC, Greylock Capital, Mangart Capital, T Rowe Price Associates, Inc., and Fidelity Investments. This diverse group of financial institutions underscores the broad interest in finding a resolution to Venezuela’s protracted debt crisis.
The bonds held by these investors are issued not only by the Venezuelan government but also by major state-owned entities, notably the state oil company Petróleos de Venezuela (PDVSA) and the state power company Corporación Eléctrica Nacional. The default in 2017 significantly devalued these bonds, which are currently trading at a fraction of their original value.
Additionally, the restructuring effort will need to address potential claims exceeding $10 billion related to past expropriations by the Venezuelan government. This further complicates the restructuring process, as it adds another layer of financial obligation that the beleaguered nation must contend with.
The engagement of Orrick, Herrington & Sutcliffe is expected to provide the bondholders with robust legal expertise to navigate the complex landscape of international debt restructuring. As the situation evolves, the VCC aims to work collaboratively with the Venezuelan authorities to develop a viable path forward that addresses the needs and concerns of both the bondholders and the Venezuelan economy.
This initiative highlights the critical nature of resolving Venezuela’s financial woes, which have far-reaching implications not only for the country’s economic stability but also for the global financial community involved in Venezuelan debt instruments.
