Should You Be Concerned About Defaulted Venezuelan Bonds?

It’s been a tough month for these bonds, but it’s a small allocation for most emerging-markets bond funds

Karin Anderson 23 November, 2017 | 4:08PM
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Should investors be worried about Venezuelan bonds?

Venezuela defaulted on its sovereign bonds and the debt of its state-run oil company Petroleos de Venezuela, or PDVSA, on November 16. That was nearly two weeks after Venezuelan President Nicolas Maduro announced intentions to restructure the country’s debt pile of more than $60 billion, prompting a further sell-off in the already low-priced bonds.

Over the past few years, Maduro’s mismanagement of PDVSA has led to a crippling recession and shortages of food and medicine despite the country’s massive crude oil reserves. And Maduro’s recent takeover of the legislature led to U.S. sanctions on trading newer bonds and dividend payments from Citgo, PDVSA’s U.S. oil-refinery arm, back to Venezuela.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Neuberger Berman EM DbtHrdCcy EUR I C12.99 EUR0.58Rating
Pictet-Global Emerging Debt I EUR413.29 EUR0.66Rating
T. Rowe Price EM Bd Q USD13.23 USD-0.51Rating
Templeton Emerging Mkts Bd Z(Mdis)USD4.52 USD-0.87Rating

About Author

Karin Anderson  Karin Anderson is a senior mutual fund analyst with Morningstar.