(Reuters) – Luxembourg-based Canaima Fund Lux has launched an investment vehicle that aims to pool European holders of defaulted bonds issued by Venezuela and its state-owned oil firm Petroleos de Venezuela (PDVSA) ahead of possible legal action against the government.
The South American nation suspended payments in 2017 to holders of many government bonds as well as some issued by PDVSA after collapsing oil prices left the once-prosperous OPEC nation in an economic tailspin.
Canaima said in a statement on Tuesday that European holders of 41 separate bonds issued by the government or PDVSA could swap them for a single tradable note “in order to facilitate the recovery, in whole or in part,” of their investment. Investors have until late December to take up the offer, the statement added.
The vehicle “will allow European holders to get exposure to Venezuela either with cash or by contributing ‘in kind’ with their own securities to a bigger pool of holders, in order to have legal representation and be ready when facing any potential debt restructuring going forward,” said Celestino Amore, chief executive of distressed debt fund IlliquidX, which initiated the structure.
Amore said the launch comes ahead of the sixth anniversary of the default, which was “very important” due to the statute of limitations of the sovereign and PDVSA bonds issued under New York law.
Many of Venezuela’s sovereign bonds are bid at 4-7 cents to the dollar, while most bonds issued by PDVSA are at 1-2 cents, according to price indications from Refinitiv and distressed debt traders.