Document Type
Article
Publication Date
8-1-2016
DOI
10.1093/cmlj/kmw027
Abstract
Market reports in the summer of 2016 suggest that Venezuela is on the brink of default on upwards of $65 billion in debt. That debt comprises of bonds issued directly by the sovereign and those issued by the state-owned oil company PDVSA. Based on the bond contracts and other legal factors, it is not clear which of these two categories of bonds would fare better in the event of a restructuring. However, market observers are convinced — and we agree — that legal and contractual differences would likely impact the payouts on the bonds if Venezuela defaults. Using a comparison of recent weekly yields for roughly similar PDVSA and pure sovereign bonds, we attempt to gain some insights into the value investors assign to the legal differences between these two categories of bonds.
Publication Citation
Capital Markets Law Journal, Vol. 12, Issue 1, January 2017, Pages 66-77.
Scholarly Commons Citation
Gelpern, Anna; Colla, Paolo; and Gulati, Mitu, "The Puzzle of PDVSA Bond Prices" (2016). Georgetown Law Faculty Publications and Other Works. 1794.
https://scholarship.law.georgetown.edu/facpub/1794