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 due to the economic crisis that lasted for years and the U.S. sanctioning the country, which cut it off from the international capital market. The government and the state oil company Petroleos de Venezuela (known as PDVSA) issued the international bonds.
Since then, accumulated interest and legal claims related to past expropriations added to the unpaid principal. Total external liabilities have risen far beyond the face values of?the?original?bonds.
Venezuela's distressed bonds have risen since U.S. president Donald Trump took office in January 2025, as speculators betted on the possibility that political change would occur.
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 gross domestic product at $82.8 billion by 2025. This implies a debt to GDP ratio between 180%-200%.
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 U.S.-based refiner owned by Caracas-based PDVSA, is now the focus of efforts to recover value from creditors under court supervision.
Who holds what?
It's been difficult to track ownership due to years of sanctions and 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. ConocoPhillips, Crystallex and other companies have received multi-billion dollar awards from U.S. Courts. These awards are now debt obligations that allow creditors to recover Venezuelan assets.
Citgo's parent is facing a growing number of claimants who have been recognized by the courts. They are suing Citgo in U.S. court proceedings. Delaware court recorded about $19 billion of claims for the auction PDV Holding (Citgo parent), which is far more than the estimated value Citgo's total assets. PDV Holding, PDVSA's 100%-owned subsidiary, is PDV Holding.
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 is another obstacle. Since 2017, restrictions under both Republican- and Democratic-led administrations have severely limited Venezuela's capacity to issue or restructure debt without explicit licenses issued by the 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 shows that many of these coins trade at 27-32 cents per dollar.
Citigroup analysts estimated in November that 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 20-year bonds with a coupon rate of 4.4% and a 10-year note without a coupon to cover past-due interests. Citi, using an exit yield (11%) estimates that the net present value is in the low 40s cents per dollar. Recoveries could rise to the high 40s if Venezuela offered additional contingent instruments, such as warrants linked to oil.
Other investors have a broader range. Aberdeen Investments stated in September that it initially assumed recovery of around 25 cents per dollar for Venezuelan Bonds. However, 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 backdrop for recovery is bleak.
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 Venezuelan crude prices at a discount 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 timelines remain unknown. 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)
