Venezuela Signs $3.2 Billion Debt Restructuring Deal With Russia

Tyler Durden's picture

As Venezuela teeters right on the brink of complete financial collapse, Bloomberg reports that Russia has agreed to restructure roughly $3.2 billion in outstanding obligations.  While details of the restructuring agreement are scarce, both sides reported that the deal spreads payments out over 10 years with minimal cash service required over the next six years.

Russia signed an agreement to restructure $3.15 billion of debt owed by Venezuela, throwing a lifeline to a crisis-wracked ally that’s struggling to repay creditors.

 

The deal spreads the loan payments out over a decade, with “minimal” payments over the first six years, the Russian Finance Ministry said in a statement. The pact doesn’t cover obligations of state oil company Petroleos de Venezuela SA to its Russian counterpart Rosneft PJSC, however.

 

“The terms are flexible and very favorable for our country,” Wilmar Castro Soteldo, Venezuela’s economic vice president, told reporters in Moscow after the signing. “We will be able to return to the level of commercial relations with Russia that we had before,” he added, noting that a deal to buy Russian wheat will be signed next week.

This is the second time Russia has agreed to reschedule Venezuela’s debt payments after agreeing to an extension last year. Still, Caracas failed to make payments amid an economic crisis triggered by low prices for oil. Rosneft has also provided several billion dollars in advance payments for Venezuelan crude supplies.

The rescheduling pact is a “demonstration of the desire to maintain ties with the current Venezuelan leadership,” Viktor Kheifets, an expert in Venezuela at St. Petersburg State University, said by phone. “Russia isn’t happy with everything that the government there is doing but Venezuela is an ally where Russia has economic interests and Moscow is firmly against a forcible change of regime there.”

 

In a website statement announcing the deal, Russia’s Finance Ministry said, “The debt relief provided to the republic from the restructuring of its liabilities will allow funds to be allocated for the country’s economic development, to improve the debtor’s solvency and increase the chances of all creditors to recoup loans granted earlier to Venezuela.”

Putin Maduro

Of course, the deal with Russia comes as attempts to hold talks with Venezuela's other creditors faltered this week. President Nicolas Maduro had summoned holders of some $60 billion of bonds issued by the government and PDVSA to begin a renegotiation as the nation’s cash crunch worsens, but as we noted previously (see: S&P Downgrades Venezuela To "Selective Default" After Bondholder Meeting Devolves Into Total Chaos), the meeting turned out to be nothing more than a photo op. 

Meanwhile, as the Financial Times noted yesterday, failure of ISDA committees to determine whether or not a default event actually occurred when Venezuela blew through its grace period, has only added to the confusion of the restructuring process.

A finance industry committee convened to discuss whether Venezuela’s state oil company has defaulted on its debts has elected to delay the decision once again, underscoring the uncertainly swirling around the country’s bond payments.

 

Venezuela belatedly came through with a $1.1bn PDVSA bond payment last week, but only well after a three-day grace period following the bond’s maturity on Nov 3. That led to a request that the International Swaps and Derivatives Association’s “determinations committee” consider whether PDVSA was in default.

 

The Isda committees have the power to declare a “failure to pay”, which would trigger insurance-like contracts on PDVSA’s bonds, known as credit-default swaps, even if the actual bondholders haven’t declared it a default. But in a statement on its website on Monday, Isda said that the committee had decided to reconvene on Tuesday at 11am to discuss the PDVA question further.

All of which has left bondholders in limbo...

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JibjeResearch's picture

Russia consolidating the oil supply....

Ghost of PartysOver's picture

So Russia gets interest payments or oil infrastructure in case of default.  Sounds like a GS deal to me.  Venezuela just sold their soul to Russia and Russia gets a foothold in South America.  Well played Putin.

ne-tiger's picture

Nothing wrong for russian, just couple of billion wouldn't last.

bobcatz's picture

Russia and China are ALL business. While the USSA is ALL warmongering for Israhell. http://wp.me/p4OZ4v-2g9

eclectic syncretist's picture

Wow!!! Fucking Wow!! For a few minutes of running the printing presses Russia gets a positive working relationship with the country controlling the largest proven energy reserves in the world, and also gets an internationally valid claim against said oil if things go south on their no-lose deal. 

The real shocker is how it took so long for this to happen. That's where the real story is here.

https://en.wikipedia.org/wiki/Oil_reserves_in_Venezuela

When do we start hearing about the petro-ruble, to go along with the petro-yuan, gold-backed yuan ect......How's that dollar doing now you stupid motherfuckers in Congress?

JibjeResearch's picture

We could have Venezuela's oil though peaceful mean...

but too many imbeciles in the Gov.

VZ58's picture

Indeed. Putin knows what he is doing. can't say that about anyone in the West unless it is about helping Israel.

ne-tiger's picture

They know what to do to help Isreal

Salsa Verde's picture

The US attempted economic warfare with Russia and Putin responded by forming a new Russian Oil dynasty.

Wonder what the odds of them trading in Petrodollars is?

JRobby's picture

Just tack it on the back end. Keep the carbon flowing!

HRClinton's picture

Petro-Ruble + Gas Ruble. = Energy Ruble

Gold Ruble.

Energy Ruble + Gold Ruble = Check Mate

Clock Crasher's picture

Jim Willie called it

YUNOSELL's picture

Hopefully this means Venezuela can get their shit together now, and start feeding their people

Juggernaut x2's picture

Russia will commence airlifting borscht and vodka to the Venezuelans

HRClinton's picture

Not airlifting. Shipping. 

Next up: Russian Naval Port in Venezuela.

Sailors and V women are getting excited. 

(USB song: "In the Navy... into Davey". Lulz)

GunnerySgtHartman's picture

Not likely, sir.  This only puts off the inevitable.  It would be interesting to know what Maduro whored out to Russia to get the restructuring.

VZ58's picture

Well sure - kinda like what Congress is doing right? Meanwhile another opportunity missed by the West and guranteed oil for Russia- soon to be paid in non-petrodollars. 

GunnerySgtHartman's picture

I don't think that Maduro would be willing to deal with the US, at least - his ego won't let him do it.  Other Western nations, perhaps ...

HenryHall's picture

Not deal with the US?

Where do you think Venezuela gets refined product from?

GunnerySgtHartman's picture

We're dealing with Maduro here - common sense is not his strong point.

JibjeResearch's picture

We missed a great opportunity... because of imbeciles in DC.

Son of Captain Nemo's picture

I just saw something happen in Lugansk (https://southfront.org/lpr-leadership-clashes-national-security-team/) and "Raqqa"!!!

"Turkey on Wednesday condemned as “an extremely grave revelation” the potential escape of hundreds of extremists from the Syrian city of Raqqa. The US-backed Syrian Democratic Forces (SDF) said over 3,000 civilians had left Raqqa on October 14 as part of a deal negotiated between officials from the provisional Raqqa Civil Council and Islamic State (IS, formerly ISIS/ISIL) fighters, AFP reported. The US-led coalition later acknowledged that of these up to 300 were seen as ‘potential’ IS fighters. Ankara has long criticized Washington for working with and arming the Kurdish YPG as the main US ally in the fight against IS."...

What might you ask is the difference in these asymmetric act(s) of warfare?...

Only one of those sides has the "sound money"! Can you guess which of the party(s) "DOES NOT"?!!!

Tick... Tock... Tick... Tock..

Mike Masr's picture

I would take what you read on southfront.org with skepticism and a grain of salt.

Poroshenko's very existance is under threat from his own neo-nazi banderists and he is desperately trying to divert attention away from his problems by escalating the attacks on innocent civilians in the Donbass. Read below how his Ukro-nazi forces attacked a school bus with 40 kids.

http://nrt24.ru/en/news/ukrainian-army-has-gone-totally-mad-school-bus-4...

Better to also keep an eye on these websites to get a more balanaced perspective.

Novorossiya Today

http://nrt24.ru/en

Fort Russ

http://www.fort-russ.com/

 

Son of Captain Nemo's picture

M

I agree with everything you're saying but just look at the before and after of Ukraine circa 2014 and the level of desperation that still prevails in that Zionist contrived 'basket case".

If you had told me that Porko-Jew would still be the titular head in 2017 after what the U.S. has already done to it I probably would have laughed in your face outside of 1 year of that coup...

Well... That junta is still alive and well -isn't it!

HenryHall's picture

Re: Lugansk and "return to Ukraine" Danego has said that his words were taken out of context and redistributed with intention of misleading.

See https://wins-go.livejournal.com/208977.html  (google translate is good enough)

Danego's words would be better rendered as "Ukraine no longer exists".

HRClinton's picture

For their sake, I hope that Turkey has finally figured out that all they ever were or will be, is a "Junior JV player" in the Anglo-Zionist sphere. 

Their ONLY purpose was to stymie and contain the Soviets, and now the Russians. Cause that's what (((Bolshevik descendants))) and Rothschilds want. 

Turkey is just an Asset, a bunch of turkeys to the A-Z Team.

GodSpeed_00's picture

Socialists will blow the money in no time.

Juggernaut x2's picture

If you are from the US you really shouldn't talk shit about pissing away money.

Samuel Culper's picture

That's a dumb thing to suggest

idahobandito's picture

Godspeed is correct....CONgress is FULL of Socialist pretending to be Republicans and Democrats.

idahobandito's picture

Now thats a rare statement I can agree with. You may add the whole world, not just the USA. Look at Norway, which is very rich, but they will piss it all away in a few decades and be just like the rest of us. Politicians need to be ...... as they are un accountable, and self serving.

Chupacabra-322's picture

I don’t believe it’s “pissing” it away in as much as it is printing it away. Both one & the same. Just contradicted myself.

JibjeResearch's picture

It depends..

I like CTRL+P.  I'm almost finish paying off my mortgage.. with all the free credit.

VZ58's picture

Nobody cares what the socialists will actually do with it in VZ. It's about guaranteeing oil supplies for Russia and out manouvering the USA  petrodollar. Is anyone paying attenetion?

JibjeResearch's picture

Too many imbeciles in DC...

Shameful...

Salsa Verde's picture

On capitalist luxury items.

pods's picture

Oops, seems like that Star Wars guy, we squeezed too tight, and another star system slipped through our fingers.

Let's hope they can pull out of this nosedive.  

I hate it that I am not sure if they are so fucked because of free shit (the common meme) or the fact we have been fucking around with them forever to try and gain control of their sale of oil.

CIA and friends need to be destroyed like a band of orcs, then we can see who is fucked by their own internal policies, and who was simply being fucked by Uncle Sam.  

pods

LawsofPhysics's picture

indeed,  It really is hard to determine who has been socializing PRIVATE losses faster, China, Russia, or America?


nsurf9's picture

As bus driver says to self - good thing he's an ocean away.  

VZ58's picture

Well, there is an example of the work of a true statesman and politician who is actually doing something with an opportunity and not just blustering! Geee, guaranteed oil supplies from Venezuela - soon to be denominated in anything but petrodollars. Another opportunity missed for the US who seems more interested in the next place to bomb.

LawsofPhysics's picture

Awesome.  Meet the new boss, same as the old boss.

serotonindumptruck's picture

Putin plays 4D chess, while Washington DC plays Chutes and Ladders.

therover's picture

Come on....they are playing Trouble. Pop a six and you move twice.

anonymike's picture

Well played by GM Putin. While much of the other debt is defaulting, the debt to Russia is idling in the background with manageable payments for 6-years until the economic storm has passed. By then, Venezuela will have far less remaining debt, oil prices will be way up and good relations will have been maintained with a partner in destruction of the petrodollar.

Juggernaut x2's picture

The economic storm has been over us for awhile and shows no sign of abetting