Opposition frontrunner María Corina Machado said she would seek to roll Venezuela’s massive debt pile into a single bond as part of her plan to overhaul the country’s economy.
(Bloomberg) — Opposition frontrunner María Corina Machado said she would seek to roll Venezuela’s massive debt pile into a single bond as part of her plan to overhaul the country’s economy.
Speaking after a video presentation to economists and investors in New York on Tuesday, Machado said if she wins office next year holders of defaulted government and state oil company notes would all be treated equally and given the chance to swap their debt for a new super bond.
“We want to have one sole obligation with legal conditions in which all different liabilities can come once they are vetted,” she said in a video interview following the event at the headquarters of the Americas Society/Council of the Americas.
Restructuring debt — which stands at around $158 billion, according to the International Monetary Fund — is an integral step to Machado’s plan for a country that has fallen deeply into poverty under President Nicolás Maduro. As part of her plan, the 55-year-old former lawmaker said her administration would strengthen ties with the IMF, offer to suspend a statute of limitation to bondholders and consider warrants linked to the nation’s oil riches.
Machado said the plan is designed to attract debt holders, including a committee of international creditors that holds around $10 billion of global bonds. “The ability for these funds to participate in a swap process within the massive privatization could be very attractive,” she said.
A self-described liberal centrist, Machado is leading a field of 14 opposition candidates vying to challenge Maduro in the 2024 election. She was No. 1 among possible primary candidates with 68% support of those with a high likelihood to vote, according to a June poll from Delphos, up from 37% in March. The opposition is scheduled to hold a primary vote in October.
Still, she faces significant challenges. Maduro’s government prohibits her from leaving the country and banned her from running for public office in late June. Machado has said her disqualification is meaningless and that she plans to participate in the primaries, hoping an eventual victory will force Maduro to lift the ban.
Her support for a tolling agreement could pave the way for opposition lawmakers to sign an extension that would push back the statute of limitations deadline. The Venezuela Creditors Committee has warned that suspension of the statute is needed to avoid litigation.
Her economic team said Maduro’s government should give the opposition assurances that signing a tolling agreement will not have legal consequences for them in Venezuela. The opposition-led National Assembly is the only recognized Venezuelan authority in US courts and therefore authorized to enforce such an agreement.
“The tolling agreement has to be done in order to be conducive to a renegotiation process of Venezuelan debt,” Gustavo García, a former IDB economist who is part of Machado’s team, said during the presentation Tuesday.
Read more: Venezuela Creditors Urge Opposition to Support Bond Standstill
Maduro offered to suspend the statute of limitations in March, but his proposal is not enforceable because US courts do not recognize his government. Meanwhile, the opposition’s National Assembly was recently granted authority by the US to represent the country in negotiations with creditors, ending the legal void created by the removal of Juan Guaidó as interim president in January.
Oil Privatization
Machado said she favors an “expansive stabilization” of Venezuela’s battered economy through market-friendly policies and privatization of most industries, including the nation’s all-important oil sector.
Her economic plan includes swapping sovereign debt for ownership or stakes in state-owned enterprises that would be privatized under her tenure. She also said she would reform Venezuela’s existing hydrocarbons law by eliminating ownership restrictions to increase foreign investment in the industry.
“We want to open Venezuela’s energy sector to attract the most advanced and capitalized companies in the world,” she said.
–With assistance from Andreina Itriago Acosta, Maria Elena Vizcaino and Nicolle Yapur.
(Updates with details of plan throughout)
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