Venezuela, on brink of default, looks to restructure US$150bn mountain of debt

Crisis-hit Venezuela, seen by many investors on the threshold of default, will try to restructure its debt after its oil company makes a scheduled US$1.2 billion payment, according to President Nicolas Maduro on Thursday.

“After this payment, I decree a refinancing and a restructuring of all external debt and all of Venezuela’s payments,” Maduro said in a statement broadcast on state television.

He said the efforts to modify reimbursement of his country’s debt pile – estimated at $150 billion – would start after Friday, when the oil company PDVSA pays the US$1.2 billion in maturing bonds.

US sanctions imposed on Venezuela in August, however, threaten to complicate Maduro’s ambition. They ban US trade in any new bonds issued by the Venezuelan government or PDVSA – a needed step in any restructuring.

Much of Venezuela’s debt is held by China and Russia, to be paid off in oil – the resource that underpins the Venezuelan economy. The country has less than US$10 billion in foreign currency reserves.

Credit-rating agencies are increasingly warning of the risk of a Venezuelan debt default.