Venezuela's PDVSA 2020 bonds in the United States "are valid and enforceable" despite Guaidó's efforts


A New York judge ruled friday that Venezuelan state oil company PDVSA's 2020 bonds are valid, a setback for opposition leader Juan Guaidó calling for null and void to prevent creditors from staying with Citgo.

"The court declares that the 2020 bonds and the documents governing them are valid and enforceable," Manhattan Federal Judge Katherine Polk Failla wrote in a 68-page ruling.

The bonds were issued by the government of President Nicolás Maduro in 2016 in a debt redemption, and are guaranteed 50.1% of the shares of refiner Citgo, PDVSA'sU.S. subsidiary and Venezuela's largest overseas asset.

Last October, PDVSA stopped paying capital and interest on securities. Guaidó's team, considered Venezuela's interim president by the United States and nearly 60 countries, also stopped paying interest in the United States.

The judge noted in her ruling that "a default has occurred" and that trustee MUFG Union Bank can sell the collateral that guaranteed the bonds, that is, Citgo.

In a statement, Guaidó's office crossed out the "unfair" decision, claiming to support "conducting the necessary assessments to consider all legal options, including appeal."

The ruling is "direct consequence of the irresponsible borrowing policies" of the Maduro government, the document notes.

Guaidó's team took control of Citgo last year. The opposition leader sought justice to declare bonds null and void so as not to have to pay creditors.

Guaidó claimed that the bonds should have been approved by the National Assembly, the unicameral parliament and only power held by the opposition, and they were not.

"We insist that the issuance of these PDVSA-2020 Bonds (...) it's absolutely fraudulent," the parliamentary chief's statement reiterated.

Despite the ruling, creditors will not be able to immediately access Citgo's shares.

Following sanctions against Venezuela by the United States, which seeks to overthrow Maduro, until January 19, 2021, bondholders cannot keep Citgo shares to collect their money.

Guaidó sees this decision as a "protective measure" that allows the nullity of the bond to be sued "without risk of losing Citgo".

The country's external debt with the largest oil reserves amounts to more than $140 billion, according to the ecoanalytic consultancy.

With production going from 3.2 million barrels per day, 12 years ago, to about 400,000 barrels a day today, Venezuela's oil industry is mired in a serious crisis, which experts attribute to poor management and corruption cases.


Related Businesses
    - - Customer

    Copyright © 2020 by CreditRiskMonitor.com (Ticker: CRMZ®). All rights reserved.  You are not permitted to use this report or the information contained herein for any purpose not expressly permitted by CreditRiskMonitor.com, Inc. Except as expressly permitted by CreditRiskMonitor.com, Inc., you are not permitted, in whole or in part, to copy, alter, correct, adapt, translate, enhance, lease, sell, sublicense, assign, distribute, publish, otherwise make available to any third party, or prepare derivative works or improvements of this report or any of the information contained therein. You are not permitted to reverse engineer, disassemble, decompile, decode, or adapt the software, algorithms or other processes used to prepare this report, or otherwise attempt to derive or gain access to the source code of same. You agree not to remove, alter, obscure, combine or otherwise change any disclaimers, trademarks, copyrights, other intellectual property rights, proprietary rights, or other symbols, notices, marks, or serial numbers on or relating to any copy of the report or on marketing or other materials that CreditRiskMonitor.com, Inc. may provide to you. You will not use this report in any manner or for any purpose that infringes, misappropriates, or otherwise violates any right of any party, or that violates any applicable law.  
    The FRISK® scores, agency ratings, credit limit recommendations and other scores, analysis and commentary are opinions of CreditRiskMonitor.com, Inc. and/or its suppliers, not statements of fact, and should be one of several factors in making credit decisions.  Any reliance you place on the information in this report is strictly at your own risk. Except as expressly provided by CreditRiskMonitor.com, Inc., no warranties or representations of any type, including without limitation of results to be obtained, merchantability or fitness for a particular purpose, are made concerning any part of CreditRiskMonitor.com, Inc.’s service, including without limitation the FRISK® scores.  The information published above has been obtained from sources CreditRiskMonitor considers to be reliable.  CreditRiskMonitor.com, Inc. and its third-party suppliers do not guarantee or validate the accuracy and completeness of the information provided in this report, the underlying information input to create the FRISK® scores, and specifically do not assume responsibility for not reporting any information omitted or withheld.  By using this website, you accept the Terms of Use Agreement
    Contact Us: 845.230.3000
    Fundamental financial data concerning public companies may be provided by Refinitiv (click for restrictions)
    Tuesday, October 27, 2020