Twilight of Venezuela’s Idols: Was Today PDVSA’s Day of Reckoning?
Today the joint forces of diplomacy, finance and military might closed in on the regime of Venezuela’s president Nicolás Maduro, hastening its demise.
Here is what happened today:
- EU issued sanctions on Venezuela. This significantly complicates next week’s renegotiations in Caracas of $160 billion of debt. The negotiations were unsavory enough, under US sanctions and led by a sanctioned drug kingpin and Hezbollah bag man, Venezuela’s VP Tareck el Aissami. Not many reputable banks left and a more limited operating space.
- ISDA was asked to rule whether PDVSA is in default. If they rule yes, that is goodbye to Citgo (mortgaged to Rosneft, presenting a CFIUS imbroglio about which our president has written for the Daily Beast), oil tankers, refineries, foreign bank accounts. Soon Maduro will be left ONLY with drug money. The IMF will save Venezuela, but regime change is a pre-condition, as they know his regime will not abide by the necessary institutional changes.
- In an interview with the Financial Times, Argentine president Mauricio Macri called on the US to issue a full embargo on the importation of Venezuelan oil. That would strangle the SOE PDVSA.
- Yesterday Venezuelan journalist and frequent military embed Daniel Blanco reported that the militaries of the US, Peru, Colombia and Brazil are doing joint exercises in the Brazilian jungle 600 km from the Venezuelan border in preparation of a humanitarian intervention.
Our Predata signals issued the following visualizations, of interest to our financial services clients:
Overall country volatility has been rising steadily over the past month. It’s now reached a near-year high. Last time the signal was this high was when the Constituent Assembly first convened.
Volatility in the security and civil sectors is also at a virtual year-high. The message here is that based on digital traffic, the economic situation is perceived as truly dire, and the societal crisis is deepening. Major drivers of volatility are Spanish-language sources related to the Latin American Debt Crisis of the 1980s (a sign that online audiences fear a calamitous collapse in Venezuela), the Venezuelan currency, and Guyana Essequibo, which Venezuelans are complaining is being decimated by Chinese mining companies with regime complicity.
Watch your Twitter and pass the popcorn. The events to watch in the coming days are:
- Does ISDA declare a PDVSA default?
- How do those November 13th negotiations in Caracas go?
Sure, Russia and China might wade in deeper to Venezuela, but even they are showing signs of nervousness. Reports from Caracas are that the Chinese have been opening discussions with leaders of the Venezuelan opposition. Even they are wondering if a new (more competent) crew would not increase the odds of their being repaid the circa $60 billion they are owed.
For those of us who have long tracked Venezuela, we anticipate a very rough ride for its long-suffering 30 million citizens, most of whom want regime change. But we are also hopeful that they will turn a corner in 2018.
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