USU sees “highly problematic” PDVSA bond purchase by Goldman

The US government said today that Goldman Sachs’s purchase of Venezuelan state oil company PDVSA’s $ 2.8 billion bonds is “highly problematic” because of the “potential illegitimacy” of the transaction in the face of a lack of approval from The Venezuelan National Assembly.

“Clearly, there is concern in the minds of everyone who is looking to make this type of debt purchases today, it is highly problematic,” a senior State Department official said in a conference call to comment on the Venezuelan crisis.

The official, who asked to remain anonymous, pointed to Venezuelan National Assembly warnings “to all financial institutions, both Venezuelan and foreign, about the potential illegitimacy of the agreements reached without the approval of the legislature.”

Indeed, National Assembly President Julio Borges sent a letter addressed to Goldman Sachs chief executive Lloyd Blankfein in which he warned that the economic commitments made to the government of Venezuelan President Nicolás Maduro will not be valid in the future Democratic government.

“Venezuela and its future democratic government will not forget where Goldman Sachs was when he had to decide,” Borges said in the letter sent Monday.

The investment comes amid a wave of protests in favor of and against the government of Nicolás Maduro that sometimes end in violence and, for almost two months, have left 59 dead and a thousand injured, according to figures from the Office of the Prosecutor .

The asset management department of Goldman Sachs paid 31 cents a dollar, or 865 million dollars, for bonds issued by state-owned oil company Petroleos de Venezuela (PDVSA) in 2014, due in 2022.

The price of the bonds, which were in the possession of the Central Bank of Venezuela, is a significant reduction on the Venezuelan stock market that expires the same year.

Venezuelan bonds are widely marketed for their high profitability, given the poor economic situation of the Caribbean country, which links years of recession and is close to hyperinflation, and the commitment expressed by President Nicolás Maduro to pay the debt obligations.

If Caracas complies with the payment, the Wall Street investment bank would get benefits close to 40%.

Goldman Sachs defended the transaction today in a statement sent to Efe in which he indicated that they invested “in Venezuelan Petroleum bonds (PDVSA) because, like many others in this sector, we believe that the situation in that country has to Improve over time “.

He also explained that these bonds, which were issued in 2014, were bought in the secondary markets through a broker in an operation in which they did not interact directly with the Venezuelan government.

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