Sorry Bond Lords, Venezuela Is a Dictatorship Now, by Kenneth Rapoza – Forbes

Fuente Web

Venezuela is a dictatorship now.

The leftist government of Nicolas Maduro said Thursday that there will be no recall referendum to hold early elections. He also barred opposition leaders from leaving the country, in a move that some say may eventually lead to political persecution of his rivals.

In early September, millions of Venezuelans emptied out into the streets calling for the recall referendum. The Venezuelan economy is in the gutter. Inflation is triple digits. Food is scarce. There is an unprecedented brain drain. And the country’s most important enterprise, oil firm PdVSA is on the cusp of default.

Thursday’s killing of early elections means Maduro will be in power until 2018. But if he feels his Socialist Party of Venezuela (PSUV) will be losers in those elections, chances are high, judging by his behavior, rhetoric and hard left ideology, that he is not going anywhere. Oddly, as his role model Cuba opens up gradually to the U.S., Venezuela is in the process of closing its doors.

What does it mean for PdVSA bonds if Venezuela opts out of paying those bills?

Eric Fine, bond fund manager for Van Eck Global’s fixed income strategy thinks PdVSA defaults. I asked him for his take. Here’s the takeaway from our interview.  

Read the entire report here.