Venezuela Creditor Group Taps Millstein as Financial Adviser

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(Bloomberg) -- With Venezuela and its state-owned companies behind on $3.4 billion of bond payments, a group of creditors has joined together to consider their next steps and selected Millstein & Co. as financial adviser.

The group will seek to evaluate the financial condition of Venezuela’s government and state oil producer Petroleos de Venezuela SA and “consider financing alternatives under an appropriate policy scenario,” according to a statement, which doesn’t detail which institutions are included in the committee or how much debt they hold.

Mark Walker, the head of sovereign advisory at Millstein, is representing the committee, according to the statement. Bloomberg reported in November that he was entertaining proposals from the group, which at the time was still in its early stages of organizing.

The group has about 15 members, mostly long-term investors rather than hedge funds, according to two people with knowledge of the matter who asked not to be identified because they aren’t authorized to comment. The biggest publicly reported holders of Venezuela and PDVSA bonds include Fidelity Investments, BlackRock Inc. and Allianz SE. They were among those reported to have been included when the group was first organizing.

Venezuela’s bondholders have been mired in limbo since November, when President Nicolas Maduro said the country would seek to restructure its approximately $60 billion of obligations amid a shortage of hard currency he blamed on an international financial conspiracy. But U.S. sanctions imposed for anti-democratic moves mean Venezuela can’t issue new bonds that would generally be part of any restructuring. So, it’s unclear what the committee can accomplish as long as Maduro remains in power with the sanctions in place.

Presidential elections slated for next month may prove a catalyst for change, and creditors are getting themselves organized ahead of time. While analysts say opposition candidate Henri Falcon has a slim-to-none chance of an electoral victory, some investors have been snapping up the nation’s debt in case of a potential upset. That would probably clear the way for a restructuring at prices higher than current levels of about 30 cents on the dollar.

©2018 Bloomberg L.P.

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