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Venezuela Bonds Rally as IMF Resumes Formal Contact with Caracas

Financial Post

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The IMF resumed formal contact with Caracas after a majority of members approved the move, marking the first step toward restoring Venezuela’s access to global financing and economic support. Venezuela’s defaulted sovereign bonds surged to their highest levels since 2017, with 2027 notes reaching 53 cents on the dollar, while PDVSA bonds hit decade-high prices amid renewed investor optimism. The U.S. recognized acting president Delcy Rodríguez in March, enabling cooperation on energy investments and paving the way for potential debt restructuring, though sanctions still block formal restructuring talks. Analysts warn the IMF’s long-overdue economic review—its first since 2004—could reveal worse-than-expected conditions, risking overvalued bond prices despite short-term gains and optimistic market sentiment. The rally follows Nicolás Maduro’s January capture by U.S. forces, accelerating interim government reforms and fueling hopes for economic stabilization after years of isolation and hyperinflation.

Venezuela Bonds Rally as IMF Resumes Formal Contact with Caracas

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Article content(Bloomberg) — Venezuela’s dollar bonds are rallying on Friday as the International Monetary Fund’s decision to resume contact with authorities in Caracas lifts investor sentiment toward the nation’s defaulted debt.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentA majority of IMF members backed the resumption of contact on Thursday, the fund said in a statement. The decision, which came a little over a month after the US recognized the authority of acting president Delcy Rodriguez, paves the way for Venezuela to regain access to critical financing and resources that would help to restore the oil-rich nation’s battered economy. Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle content“We welcome this decision by IMF member states as an important step in Venezuela’s economic stabilization and recovery,” Treasury Secretary Scott Bessent wrote Friday on X. “The @USTreasury looks forward to Venezuela’s working with the IMF on policies to benefit all Venezuelans.”Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentSovereign notes due in 2027 rose by as much as a cent on Friday to trade above 53 cents on the dollar, remaining at their highest levels since mid-2017, according to indicative pricing data compiled by Bloomberg. Bonds issued by state-owned oil company Petroleos de Venezuela S.A. also jumped, with the 2026 maturity reaching the highest in almost a decade.Article contentThe country’s debt has posted some of the strongest gains in emerging markets this year following the capture of strongman Nicolas Maduro by US forces in early January. The interim government of Rodriguez has been cooperating with the Trump administration to boost investment in the country’s energy sector and lift the local economy. The thaw between the two nations has bolstered expectations of a long-awaited debt restructuring, which is currently barred by US sanctions. Article contentArticle contentBut the IMF re-engagement could open a can of worms for investors. The fund hasn’t conducted its standard annual review of the nation’s economy — known as the Article IV consultation — since 2004.Article content“The IMF may forecast an economic reality materially worse than the market prices,” said David Austerweil, emerging-markets deputy portfolio manager at VanEck in New York. “The lack of up to date audited data for investors to value bonds with has allowed the market to price an optimistic scenario for haircut and exit yield. We still believe it’s a compelling investment opportunity, but prices have run far ahead of our near term scenarios.”Article contentTrending Brace for gas price 'shock' in inflation numbers out Monday, say economists Economy Canadian quantum company Xanadu soars to $16 billion valuation after Nvidia release Innovation How much money should Gerry, in his 70s, have in equities, bonds and cash?

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