White House Official Rebuffs Venezuela Bondholders on Trade Ban

(Bloomberg) -- A senior Trump administration official told a group of Venezuela creditors last week that restrictions on trading the nation’s debt probably won’t be lifted until President Nicolas Maduro is out of power.

Mauricio Claver-Carone, the National Security Council’s senior director for Western Hemisphere affairs, said at an event in New York that bondholders knew the risks when they bought the notes and it’s not the job of the White House to guarantee investments, according to three people in attendance, who requested anonymity because the meeting was private.

Creditors advised by Cleary Gottlieb Steen & Hamilton and Guggenheim Securities have been calling on the Trump administration for months to roll back measures that block U.S. people or entities from buying Venezuelan notes on the secondary market. One concern: As JPMorgan Chase & Co. drops the nation’s weight in its benchmark bond indexes to zero, some U.S. investors will be forced to unload the debt. The bondholders say it will wind up owned by foreign hedge funds that are more likely to be litigious in bond restructurings, tying up billions of dollars that could be used to restart the economy.

Claver-Carone, an influential administration official on Venezuela, told the group that the U.S. government lacks evidence to support the argument levied by the ban’s critics that Russia, China and Maduro regime insiders could benefit from the sanctions by buying Venezuelan debt at dirt-cheap prices. No one offered him proof of that transpiring. He spoke at an event last Wednesday hosted by Barclays Plc while he was attending the United Nations General Assembly.

The U.S. official told the investors that he expected Maduro out of power soon, although he acknowledged that a political transition could have taken place sooner had the U.S. been more aggressive with its sanctions in the months before National Assembly President Juan Guaido claimed the presidency in January.

Barclays spokesperson Danielle Popper declined to comment. A National Security Council spokesman had no immediate comment.

On Monday, Maduro called for new negotiations with foreign investors on about $60 billion of defaulted debt. He said Vice President Delcy Rodriguez and Economy Vice President Tareck El Aissami will lead discussions with bondholders. Yet investors have been leery about talking with the two sanctioned officials.

To contact the reporter on this story: Ben Bartenstein in New York at bbartenstei3@bloomberg.net

To contact the editors responsible for this story: Carolina Wilson at cwilson166@bloomberg.net, Alec D.B. McCabe, Philip Sanders

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