Oil rout raises fears of Venezuela debt default
By Paul Kilby
NEW YORK, Jan 20 (IFR) - Slumping crude prices have investors bracing for a messy default in Venezuela, where the sovereign and state-owned oil company PDVSA have some US$10bn in external debt payments due this year.
With crude hovering around US$28 per barrel, Venezuela - which on Wednesday reportedly requested an emergency OPEC meeting - could have trouble satisfying its obligations
Barclays said the country will have difficulty avoiding a credit event in 2016 - and that is based on the bank's forecast of US$37 oil, almost $10 higher than current prices.
That sentiment seems to be widely shared in the market, even though President Nicolas Maduro assured the National Assembly last week that Venezuela would continue to pay what it owes.
"It is a question of when, not if," said Russ Dallen, a partner at Latinvest in Miami, referring to the possibility of a default.
"The only thing that could change that is a sharp recovery in oil prices, and/or a bailout from Venezuela's friends in China, Russia or Iran."
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