The price of Venezuela’s defaulted debts surged almost 30 per cent on Monday following the US apprehension of Nicolás Maduro, delivering a windfall to hedge funds and other investors who had snapped up the bonds for cents on the dollar.
Venezuela’s government bonds, in default since 2017, jumped to 42 cents on the dollar on Monday, up from 33 cents before the US operation to remove the Venezuelan president. Debts of PDVSA, the state oil company, also gained, with bonds maturing in 2035 rising from 26 cents to 33 cents.
The rally — which has been gathering steam since October — has rewarded managers who spent years building positions in unloved debt with a face value of $60bn, but which had traded at 16 cents on the dollar as recently as a year ago. Many investors had abandoned the trade due to US sanctions and Maduro’s seemingly unshakeable grip on the country, and few were willing or able to place new bets on the bonds.