Goldman Buys $2.8 Billion Worth of Venezuelan Bonds, and an Uproar Begins

Julio Borges, the opposition lawmaker who heads the National Assembly, wrote a letter of protest to Lloyd C. Blankfein, the chief executive of Goldman Sachs, accusing the Wall Street firm of looking to make a “quick buck off the suffering of the Venezuelan people.”

Goldman Sachs has defended the deal, saying that many other investors, including mutual funds and exchange-traded funds, own the bonds and that its asset management division bought the securities on the secondary market, without interacting with the Venezuelan government.

Nevertheless, the transaction highlights the extent to which investors are willing to take on increasing levels of political and economic risk as they seek high-yielding investments when interest rates still hover near zero.

“There is a lot of interest in this trade,” said Carlos de Sousa, an economist at Oxford Economics, a research company based in London. “We are in a low-rate environment, and these are dollar bonds with really high yields.”

Among the large holders of Pdvsa bonds are BlackRock, T. Rowe Price, Fidelity, JPMorgan Chase and Ashmore, an emerging market specialist based in London.

But none of those firms carry Goldman’s reputation for being politically influential and financially opportunistic — a combination that has made it an easy global punching bag.

At the root of what makes the bonds so attractive to investors, beyond their more than 20 percent returns, is the crucial role played by the Venezuelan oil company in providing foreign exchange to the embattled Maduro government.

While Venezuela has been in economic crisis for more than two years, the surge of people to the streets began after its Supreme Court, which is loyal to Mr. Maduro, tried to dissolve the country’s National Assembly in late March. The group of lawmakers, controlled by…

Read the full article from the Source…

Back to Top