Venezuela's distressed debt of billions: Who will collect?

The fall of Nicolas Maduro brought Venezuela's debt crisis, one of the largest unresolved defaults in the world, to the forefront.

Venezuela defaulted on its international bonds in late 2017, after years of economic turmoil and U.S. Sanctions that cut the country off from international capital markets. The government and the state oil company Petroleos de Venezuela (PDVSA) had failed to make payments.

Since then, interest accrued and claims arising from past expropriations have been added to the unpaid principal to increase the total external liabilities. This is far more than the face value of original bonds.

Venezuela's distressed debt is up since the U.S. In January 2025, speculators began to bet on the likelihood of political change when?President Donald Trump took office.

Here's a list of entities that owe money. You can also see what might be included in a restructure and who could be coming to Caracas to collect.

How much does Venezuela owe?

Analysts estimate Venezuela to have around $60 billion in outstanding bonds. Analysts estimate that the total external debt, including PDVSA obligations and bilateral loans, arbitration awards and court judgments, is between $150 and $170 billion depending on how accrued interests and court judgements are counted.

The International Monetary Fund (IMF) estimates Venezuela's nominal GNP at $82.8 billion by 2025. This implies a debt to GDP ratio between 18%-20%.

A PDVSA bond originally maturing ?in 2020 was secured by a majority stake in U.S.-based refiner Citgo, which is ultimately owned by Caracas-headquartered PDVSA. Citgo, a major asset in the PDVSA portfolio, is now being pursued by court-supervised creditors to recover its value.

Who holds what?

It's been difficult to track ownership due to years of?sanctions. This includes a ban on trading Venezuelan debt. International bondholders and distressed-debt specialists, also known as vulture funds, are likely to make up the largest portion of commercial creditors.

A group of companies that were awarded compensation by international arbitration for assets expropriated from Caracas is among the creditors. U.S. Courts have upheld multibillion dollar awards to ConocoPhillips, Crystallex and others. These claims were turned into debt obligations that allowed creditors to pursue Venezuelan property to make themselves whole.

Citgo's parent, PDV Holding, is being sued by a growing number of claimants who have been recognized by the court. Delaware's court has registered claims of $19 billion for Citgo parent PDV Holding. This is far more than the estimated value of Citgo assets. PDV Holding, a wholly owned subsidiary of PDVSA, is PDVSA.

Caracas has also bilateral creditors. These include China and Russia. They extended loans to Maduro as well as his mentor, the former president Hugo Chavez.

Venezuela hasn't published debt statistics for years, so it is difficult to get exact numbers.

A DISTANT RESTRUCTURING

A formal restructuring will be complicated and long due to the multitude of claims, legal actions and political uncertainty.

An IMF program defining fiscal targets and debt sustainability assumptions could form the basis of a sovereign debt workout. Venezuela, however, has not been consulted by the IMF annually in almost two decades. It is also locked out of its financing.

U.S. sanctions pose another obstacle. Since 2017, restrictions under Republican and Democratic administrations severely limit Venezuela's ability issue or restructure its debt without explicit?licenses from U.S. Treasury.

What will happen to the U.S. sanctioned oil-producing nation is not clear. As of now, Donald Trump said that the U.S. would "run" the oil producing nation.

What are recovery values?

In 2025, bonds have returned 95% of the index value.

MarketAxess' data indicates that many of these products are currently trading between 27 and 32 cents per dollar.

Citigroup analysts?in November estimated a principal cut of at least 50 percent would be required to restore debt sustainability, and satisfy possible conditions from the IMF.

Citi's base scenario suggests that Venezuela might offer its creditors a bond with a coupon rate of 4.4% for a period of 20 years, along with a zero-coupon 10-year note to cover past-due interests. Citi estimates that a package with an exit yield at 11% would have a net present value in the low 40s cents per dollar. This could rise to the high 40s if Venezuela offered additional contingent instruments like oil-linked warrants.

Other investors have a broader range. Aberdeen Investments stated in September that it initially assumed recoveries for Venezuelan bonds of 25 cents per dollar, but improved political and sanction scenarios could increase recoveries to the low-to mid-30s depending on the deal structure and use of GDP-style or oil-linked instruments.

What is the economic situation in Venezuela?

The recovery?assumptions are framed against a bleak backdrop.

Venezuela's economy shrank drastically after 2013, when oil production dropped off a cliff. Inflation soared, and poverty increased. The output is stabilizing, but lower oil prices globally and Venezuela's crude price discounts limit revenue gains. This leaves little room for debt service without a major restructuring. The recent U.S. oil tanker blockade has made the situation worse.

Trump stated that American oil companies are ready to enter Venezuela and invest in order to restore production, but the details and timeline remain unclear. Chevron is currently the only American oil major operating in Venezuela. (Reporting from Rodrigo Campos and Karohecker, in New York; editing by Christina Fincher).

(source: Reuters)