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Goldman Sachs USD2.8 Bn Venezuelan bonds purchase creates uproar

Venezuela’s national oil company, Petróleos de Venezuela, or Pdvsa which was bought at a massive discount by Goldman Sachs has come under the scanner. The bonds are set to mature on 2022. 

Protesters in Venezuela took to streets to shout their voice venting out their anger against the not so popular President Nicolás Maduro. This resulted in a major clash which saw some 60 people getting killed in Caracas and other cities. The Government was accused of helping the outsiders by giving a massive discount instead of importing food and medicine.

Julio Borges, the opposition lawmaker wrote a letter to the chief executive of Goldman Sachs mentioning “quick buck off the suffering of the Venezuelan people.”

Goldman Sachs has defended the deal saying that it did not interact with the Government but bought it directly from the secondary market. The large holders of Pdvsa bonds are BlackRock, T. Rowe Price, Fidelity, JPMorgan Chase and Ashmore. The bonds are expected to give more than 20 percent returns to its investors.

Pdvsa brings in about 95 percent of the economy’s dollars which is battling triple digit inflation with rampant shortage on bread, sugar and eggs making even those who could afford to buy these suffer.

Venezuela has a financing requirement of $17 billion in 2017 with its Central Bank holding a reserves of just $10 billion.

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