Venezuela is set to unveil a larger-than-expected debt pile of $240 billion as it prepares for what could be the biggest sovereign debt restructuring on record, the Financial Times reported on Wednesday, citing sources familiar with the plans.
The country, which has been in default since 2017 and whose President Nicolas Maduro was captured by US forces in January, has hired US advisory firm Centerview Partners to assess its liabilities.
Analysts had previously estimated the total at $150 billion to $200 billion. Centerview Partners declined to comment.Caracas had said it would publish its assessment by the end of June, but the FT said it may now come in early July.
Venezuela’s bonds, which have pulled back over the past month after a sharp rally following Maduro’s capture, rose by as much as 1 cent on the dollar following the report, alongside those of state oil firm PDVSA.
The FT added that a Macroeconomic Framework analysis, also due to be published by the end of the month, would estimate the South American country’s annual economic output at about $100 billion, implying a debt-to-GDP ratio above 200 per cent.
Analysts at research firm Tellimer said the larger-than-expected debt estimate could weigh on bondholders’ “recovery assumptions” — what creditors can expect to recoup after restructuring.
That risk could be greater “if the final creditor perimeter is broader than expected and if competing claims (from those wanting to be paid back by Caracas) dilute recoveries for bondholders”, they added.A legal representative for the Venezuelan Creditor Committee declined to comment.
