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Acceleration of 2034 bond spells years of legal battles for already battered Venezuela

Ten days ago I had a conversation with a source, well versed on bonds stuff. He said a few institutional investors were going to court to trigger acceleration clause on the 2034 bond, for defaulting on payment. Today Reuters posted news about this, quoting a representative of a "group of creditors" (lawyer Mark Stancil with Washington DC firm Robbins Russell) seeking payment on $1.5 billion. It is not known who Stancil represents. However I was given names of both individuals and funds believed to be involved. I sent emails requesting comment to Ravi Mehta (Pentwater Capital), Jorge Piedrahita and Roberto Enserro (Macrosynergy Partners), Hans Humes (Greylock Capital), and Guillaume Fonkenell of Pharo Management.

Hans Humes replied saying Greylock's formed a broad based, representative group of institutional investors that goes well beyond the 2034 bond group in particular.

Piedrahita (former employee of Torino Capital) suggested I contacted Enserro, who did not reply. Macrosynergy is pitching a "Miranda Recovery Fund" to investors, described as "The Fund’s objective is capital appreciation with downside protection through the enforcement of creditor rights to best avoid restructuring scenarios, where possible, with large nominal haircuts and the improved negotiating position of the Fund."

Mehta did not reply. Fonkenell did not reply.

It remains to be seen what happens after 10 January 2019, when Nicolas Maduro's term comes to an end. There's no hope on an opposition-controlled government, and the chances of chavismo enacting the kind of measures needed to lift sanctions, reactivate the economy, and create the right legal environment to welcome back foreign investment are slim, to say the least.


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