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The ouster of Nicolás Maduro is rewarding investors who spent years betting on a Venezuela comeback.
Investment firms including Fidelity and T. Rowe Price have been stuck holding tens of billions of dollars in underwater Venezuelan bonds that the government and state-owned companies such as Petróleos de Venezuela borrowed years ago. U.S. investors once held about $50 billion of Venezuelan debt, before many sold and wrote off the losses after the first Trump administration isolated Venezuela through sanctions.
But some longtime investors held on, betting they could eventually recoup part of what they were owed. An estimated $500 million of the debt trades daily, and distressed-debt funds have been buying bonds for a fraction of their face value since select sanctions were eased in 2023. Some prices have more than quintupled since then and are heading even higher, rewarding those who bought low or wrote down their positions years ago and waited.
Even though some investors could cash out profits now, many say there is even more room to run.
“Investors are feeling more optimism,” said Hans Humes, chief executive of Greylock Capital Management, an investment fund that owns a range of Venezuelan government bonds. “They already see incredible opportunity in this country.”
The price of Venezuela’s 11.75% bond due in 2026 jumped to about 42 cents on the dollar as of Monday afternoon, from roughly 32.50 on Friday, according to data provider Solve. A Petróleos de Venezuela bond that came due in 2022 climbed a comparable amount to approximately 38.
Both “real money” investors who wrote down their old investments and distressed-debt funds that more recently snapped up bonds at low prices stand to be winners. Gramercy Funds Management, which has invested in Venezuela for decades, sold most of its Venezuelan portfolio in 2019 but bought bonds at rock-bottom prices in 2023 as sanctions began to ease.
Some bondholders had all but given up hope after prolonged legal battles with Venezuela. Pharo Management won a court judgment against Venezuela in a lawsuit it filed in 2019 but began selling some of the roughly $2 billion face value of bonds it owned this year as its hopes of collecting dimmed. The firm still owns most of the position, which jumped roughly 25% in value on Monday.
Investors’ bets on Venezuela still might not pan out. The government hasn’t borrowed from Wall Street in roughly a decade, and before it can, Venezuela must negotiate with a dizzying number of creditors to restructure an estimated $100 billion of debt. The full amount is still unknown because Venezuela has published limited statistics since 2018.
Creditors also include the Chinese government. China’s involvement has complicated the restructuring of other emerging-market countries in the past, because the Asian superpower can flex its geopolitical muscle to outmaneuver Wall Street creditors. Even simple sovereign-bond restructurings often take years to resolve.
U.S. investors have also been legally forbidden from negotiating with the Venezuelan government because of sanctions. Now, at least, those prohibitions could finally come to an end. A more U.S.-friendly regime could help Venezuela get access to money from Wall Street or the International Monetary Fund.
On Monday, Delcy Rodríguez, Venezuela’s acting president, said on social media that she was ready to offer “an invitation to the US government to work together.”
“Should this cooperation remain stable, logical next steps could include the restoration of formal diplomatic relations…including at some point for negotiations around a debt restructuring,” JPMorgan analysts wrote in a Sunday note.
Some U.S. firms seeking to profit off Venezuela have hit international blowback in the past. Goldman Sachs faced criticism for lending to Maduro’s administration in 2017. Uncertainty surrounding Venezuela’s future governance makes it hard to know how buying its bonds will play out in the court of public opinion.
Yet President Trump’s plan to get U.S. oil companies more involved with Venezuela already has some investors seeing green. They foresee a deal where their defaulted bonds will be repaid through increased oil production in Venezuela.
“When the Marines invaded Iraq, oil production was 1 million barrels a day, and now it’s closer to 5 million,” said Robert Koenigsberger, chief investment officer at Gramercy. “I think some estimates that people have for the long-run GDP of Venezuela miss the mark.”
Gramercy is also among a group of investors that recently tried to acquire Citgo, a U.S.-based oil company that has been historically owned by the Venezuelan government.
The previous Trump administration made the unusual move of putting Citgo’s U.S. assets under the control of politicians in Venezuela’s opposition starting in 2019. In November, a U.S. judge blessed a proposed sale of Citgo to an affiliate of Elliott Management, which had been in a contest against several other investors to swap debts for control of the company.
Maduro and his top lieutenants, including Rodríguez, had been outspoken in opposition to the Citgo sale. Rodríguez, now the country’s acting president, said in December that the sale of Citgo was “blatant theft of a Venezuelan asset on U.S. territory.”
Despite the U.S. intervention, presaged by aircraft carriers roving the Caribbean this fall and attacks on accused drug-trafficking boats, some investors cautioned that Venezuela’s future is still highly uncertain.
“You got a lot of weapons, a lot of cash in the country and a lot of people who don’t have anything else to do,” said Eric Fine, emerging-markets portfolio manager at VanEck, which has several funds holding Venezuelan sovereign bonds. “The last thing you want to see is a ‘Call of Duty’ scenario with a bunch of soldiers on the streets.”
It isn’t clear whether Rodríguez will stay on as a transitional figure ahead of new elections or whether she will remain in power and help the Socialist Party retain control of the government. Investors say they are concerned about the regime’s ability to hold on to power and its willingness to cooperate with the U.S.
“What’s ideal is an ability for investors to negotiate in Caracas with both the government and private enterprises,” Humes of Greylock said. “But people are going to be on high alert for any kind of breakdown of social order.”
Write to Alexander Saeedy at [email protected] and Matt Wirz at [email protected]
English (US) ·