Venezuela meets creditors as debt default looms

Venezuela Declared in Default by S&P After Missing Bond Payments

Venezuela Declared in Default by S&P After Missing Bond Payments

The US agency's action came after Vice President Tareck El Aissami met with creditors in Caracas Monday but offered no way out of the impasse.

S&P lowered two issues' ratings to "D" (default) and said there is a one in two chance that the government. State oil producer Petroleos de Venezuela SA had already been said to default by Fitch Ratings and Moody's Investors Service.

President Nicolas Maduro's government had summoned creditors to Caracas for talks on Monday about restructuring Venezuela's $60 billion in outstanding bonds, but failed to present a concrete proposal.

The International Swaps & Derivatives Association will meet Tuesday to discuss whether a week-long delay on bond payments from the state oil company will trigger default-insurance contracts on those securities.

The so-called Determinations Committee for the Americas, comprised of 15 financial firms, met in NY on Monday, following an initial gathering last Friday, "to discuss whether a Failure to Pay Credit Event had occurred" with respect to PDVSA, according to the ISDA.

While the committee "received additional information in a submission on Monday", it is still considering PDVSA's status, the ISDA said.

Tightening the squeeze on Maduro was the European Union's announcement of sanctions, including an embargo on arms and equipment that could be used for political repression.

There's still hope for restructuring with only some issues in peril.

S&P said Venezuela had failed to make $200 million in coupon payments for bonds due 2019 and 2024 within the allowed 30-day grace period.

Late Sunday, Maduro struck a defiant tone, insisting that his country would "never" default and pointing to ongoing negotiations with China and Russian Federation.

As rough as the ride has been regarding debt, Maduro is also being buffeted by global accusations that he is acting as an autocrat - stomping on democracy by marginalizing the opposition, which controls the parliament, and stifling independent media.

The EU said it would not recognize Venezuela's Constituent Assembly, a chamber of loyalists appointed by Maduro in August to usurp parliamentary powers, saying its creation had "further eroded the democratic and independent institutions". She added that Venezuela sees itself as a "victim". "We would very likely consider any Venezuelan restructuring to be a distressed debt exchange and equivalent to default given the highly constrained external liquidity", S&P said.

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