Venezuela Set for Record $240 Billion Debt Restructuring

Venezuela is expected to reveal a debt burden of $240 billion, far higher than previously assumed, ahead of a government debt restructuring that would be the largest in history, according to a Financial Times report. The move follows the removal of President Nicolas Maduro, who was detained in late December by American military forces and taken to a New York prison.

People familiar with the matter said the government plans to disclose its liabilities in the coming weeks. Market estimates had placed the figure at about $200 billion. Acting President Delcy Rodriguez is trying to reach an agreement with creditors by the end of the year, a step that could return Venezuela to international markets for the first time in nearly a decade.

The government is also expected to publish updated economic data this month. Those figures are likely to show the economy at about $100 billion, down from $370 billion in 2012, the last year of Hugo Chavez’s rule. That would imply a debt-to-GDP ratio above 200%.

Venezuela is likely to surpass Greece’s 2012 debt default, which was about $200 billion and had been the biggest restructuring until now. Government bonds and debt issued by state oil company PDVSA account for about $60 billion of the total, plus another $40 billion in post-default interest, with the debt rising by roughly $5 billion a year. Previous estimates also put debts at about $50 billion to international oil companies, $20 billion in legal claims tied to Chavez-era nationalizations, $20 billion to China, $6 billion to Russia, and $4 billion to development banks. Unlike most major restructurings, this one is not being run under IMF supervision, a choice critics say leaves Venezuela at a disadvantage with bondholders. One investor called it “one of the largest debt restructurings in which the IMF is not managing the debt analysis.”