Sovereign Debt Restructurings: The Case of Venezuela—Issues and Challenges

Abstract

In November 2017, the Venezuela government announced its intention to restructure its sovereign debt. To address the challenges and issues involved, we organized a conference at Drexel University on February 23, 2018, sponsored by the Global Interdependence Center and Drexel University’s LeBow College of Business. Internationally recognized experts, academics, and renowned practitioners representing a variety of institutional perspectives presented complex issues related to the anticipated restructuring and touched upon economic, geopolitical, legal, and market-driven conditions that will impact the success of the restructuring. Although the case of Venezuela’s restructuring is complicated due to political considerations and the current humanitarian crisis in the country, nevertheless it offers a multifaceted review of a sovereign debt restructuring as more countries are expected to restructure their debt in the near future, given the rising interest rate environment. The estimated $150 billion restructuring of Venezuela’s sovereign and Petróleos de Venezuela, S.A. (PDVSA)’s debt will have a major impact on investment portfolios of institutional investors in the years to come. This article serves as an introduction to the topics covered in the conference and as a synopsis of the contributions.

TOPICS: Fixed income and structured finance, emerging, financial crises and financial market history