“The tail risk seems pretty high,” Kevin Daly, a portfolio manager at Aberdeen Standard Investments, told Reuters. “We’re trimming it back a little bit. I think it’s prudent to reduce a bit of risk here.”
The defaulted debt instruments gained as much 10 cents on Monday, the first trading day after the U.S. seized President Nicolas Maduro in a weekend operation.
Aberdeen Investments is reducing its stake in Venezuela’s defaulted bonds. These bonds have seen a significant price increase over the past year. Portfolio manager Kevin Daly cited high tail risk as the reason for this prudent move. Despite recent gains, the path to debt restructuring remains challenging due to ongoing US sanctions.
Those gains added to returns of nearly 100% last year, fuelled by investor hopes that U.S. President Donald Trump’s return to the White House could prompt regime change that could kickstart a long-awaited debt restructuring. Data from MarketAxess shows that trading of Venezuela bonds – and those of state oil company PDVSA – on January 5 and 6 soared by 1,174% from its 2025 daily average on its platform.
On Friday, the bonds were gaining again, with the 2031 maturity adding 1.2 cents to bid at 42.59 cents on the dollar. Broadly, the government debt is trading between 35 and 43 cents. Despite Maduro’s removal, debt restructuring remains daunting; Venezuela and its top officials remain under U.S. sanctions, so even talking to officials is barred without a waiver or license from the U.S. Treasury. And even once talks begin, unraveling the
estimated $150-170 million debt pile
– which comprises bonds, arbitration claims, bilateral loans and legal battles over previous government appropriations – is daunting.
“It’s unlikely for further rally until investors anticipate or become more optimistic on the prospect for a breakthrough on licensing,” Daly said.
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