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September 17, 2005

Venezuela to default?

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Argentina's recent ballyhooed bond "deal" with its creditors, forcing them to take 31 cents on the dollar, no negotiations, take it or leave it — may have given Hugo Chavez some ideas.
 
He's long been a fan of Fidel Castro's insistence that indebted nations form a 'debtor's cartel' that should default collectively to bring down the West, in the same way that a huge debtor who suddenly can't pay his bills can crash a bank.
 
Dictator Hugo Chavez, with his huge stream of oil earnings, has had far more access to international capital markets than most developing countries; it's tens of billions of dollars, so he could do significant damage if he did And with signs that oil prices are topping, he may make a move to stiff his investors soon. He certainly has done that to his direct foreign investors, it shouldn't be surprising if he has the same plans for his fiscal investors.
 
Blogger Miguel Octavio, an investment banker in Caracas, has been tracing an alarming long—term pattern of actions, and protective actions, that point to Hugo Chavez forcing Venezuela to default on its debt once the price of oil tumbles. Chavez probably believes he could get away with it like Argentina did. And again the West will pay. Miguel warns now: Investors beware.
 
A.M. Mora y Leon 03 23 05