From the Financial Times' beyondbrics blog:
Socialist Venezuela would never sell out its friends to Wall Street,
right? Yet it appears that is exactly what Caracas wants to do. Pressed by the oil price collapse,
rattled by fears of default, facing rising social tension as imports
collapse due to lack of foreign exchange, and seemingly unable to put
its economic house in order, the country is trying to raise
desperately-needed cash by selling debts owed to it by the Dominican
Republic and Jamaica on to Goldman Sachs. Chavismo turns to the vampire
squid?
The idea has been circulating for a while in the investment banking
community. But now details have emerged in the press, as reported by El Nuevo Herald, and Petroleum Argos. Essentially, the trade involves Venezuela securitizing debts owed under its $3.5bn a year subsidised oil program, called Petrocaribe.
In this case, that reportedly means selling the $4bn owed by the
Dominican Republic for $1.75bn to Goldman Sachs. The DR will then issue
fresh bonds, and with the proceeds buy the debt off Goldman. The US
investment bank is also reportedly holding conversations about doing the
same for Jamaica’s Petrocaribe debts. Along with Nicaragua, these two
countries account for $10bn of the total $14.5bn owed to Venezuela under
the 13-country program that, in the past, has bought Caracas valuable
support in fora such as the United Nations and the Organisation of
American States. But not for much longer, it seems....MORE
Venezuela's new best friend – Goldman Sachs
