Thursday, October 16, 2014

75% Chance of Venezuelan Default in Next 5 Years

Keep oil Priced below $85 per barrel and make it 100%
The cost of protecting Venezuela’s debt against non-payment with five-year credit-default swaps, already the highest in the world, soared 2.13 percentage points this week to a five-year high of 19.89 percentage points yesterday, according to data provider CMA.

The level implies a 75 percent chance that Venezuela will default in the next five years.

PDVSA’s bonds due November 2017 fell 4.63 cents yesterday to 68.26 cents on the dollar, pushing yields to a record high of 23.76 percent. The company has $3 billion of debt payments due on Oct. 28.

Venezuela paid back $1.5 billion of debt that matured Oct. 8, reducing foreign reserves to an 11-year low of $19.8 billion.

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