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Venezuelan creditors urge U.S. government to remove bond restrictions

Published 11/04/2019, 01:02 PM
Updated 11/04/2019, 01:06 PM
© Reuters.  Venezuelan creditors urge U.S. government to remove bond restrictions

CARACAS (Reuters) - Venezuelan bond creditors on Monday urged the U.S. government to remove newly imposed restrictions on the ability of holders of Venezuelan state oil firm PDVSA's 2020 bond to claim collateral after it entered default last month.

The U.S. government on Oct 24 temporarily blocked a creditor seizure of PDVSA's U.S. subsidiary Citgo, whose shares were used as collateral for the bond issue. Venezuela opposition leader Juan Guaido took control of Citgo in February after Washington recognized him as the country's legitimate president.

The following week, the bond went into default when a $913 million payment came due and Guaido's allies filed a U.S. lawsuit requesting that the bond be declared null.

On Monday, the Venezuela Creditors Committee, which groups holders of Venezuelan government and PDVSA debt, said the U.S. government had deprived them of their "ability to defend its interests" and said Guaido's team had failed to open dialogue.

"We urge the U.S. Government to remove the newly imposed restrictions on the ability of the 2020 bondholders to enforce the security interest freely granted to them," the Committee said in a statement.

The Committee criticized Guaido's team for preferring to file a lawsuit than "engage constructively with creditors."

"If the Guaido Government wishes to engage with the country's creditors in good faith and to pursue an orderly and consensual renegotiation of the country's external debts, it will have to change its approach dramatically."

A spokesman for Guaido did not immediately respond to a request to comment.

Guaido won the backing of the United States and some 50 other countries in January, but President Nicolas Maduro retains control of most state functions and the Venezuelan operations of PDVSA.

The U.S. Treasury Department, which maintains a broad sanctions program against Maduro's government, said no transfers or sales of Citgo shares linked to the PDVSA bond could take place until Jan. 22.

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