Venezuela Escapes Bankruptcy… But Oil Production Continues To Plunge
Venezuela just dodged a bullet, pulling off a last minute bond swap with creditors. The deal only buys Venezuela a little bit of breathing room, and a default at some point next year or the year after is not out of the question. Either way, the South American OPEC nation’s oil production is falling and will only continue on a downward trajectory.
Venezuela’s state-owned PDVSA avoided default at the eleventh hour, getting enough creditors onboard for a debt swap. The oil company had repeatedly offered creditors to exchange debt set to mature this year and in 2017 for payments spread out over the rest of the decade, a proposal that would allow the company – and the sovereign government – to technically avoid default.
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WNU Editor: If Venezuela's state owned oil company goes bust .... the government will soon follow. If there is a text book example on how not to run a state owned company, Venezuela's PDSVA will probably be the poster child on what not to do. Corruption .... U.S. Said to Be Closing In on PDVSA-Linked Seizures, Charges (Bloomberg), political interference .... Two Thousand Venezuelan Oil Workers Get Fired for Criticizing the Government (Panam Post), and incompetence .... Venezuelan Oil Is Largely Staying in Ground or Going Up in Smoke (WSJ). Sighhh ... you just cannot make this stuff up.
Update: Venezuela's political crisis continues .... Venezuela opposition bickers over dialogue with government (Reuters).