Venezuela Opposition Congress Approves PDVSA 2020 Bond Payment

(Bloomberg) -- Venezuela’s opposition-led National Assembly voted unanimously Tuesday to make a $71 million interest payment on the state oil company’s bonds due in 2020, the crisis-torn nation’s only notes not in default.

Lawmakers said the Petroleos de Venezuela payment was necessary because the debt is backed by a majority stake in Citgo, the Venezuelan-owned U.S. refiner, which opponents of President Nicolas Maduro have controlled since seizing the company’s Houston office in January.

Still, advisers to National Assembly President Juan Guaido, who is recognized by the U.S. and more than 50 other countries as Venezuela’s head of state, said it would be a “payment under protest” as the bonds never got congressional approval and therefore aren’t legitimate obligations.

Congressmen Sergio Vergara, a Guaido confidant, said the decision to pay was was made to “protect Venezuela’s assets at all costs.”

Last month, PDVSA’s ad hoc board, controlled by the opposition, notified the bond’s trustees of its decision to “implement all necessary actions for the payment of interest.” Failure to pay would likely trigger a rush to collect on Citgo collateral. The interest payment was due April 29, yet the bond includes a 30-day grace period before it would be declared in default.

Technically, the PDVSA board controlled by Maduro has the power to pay as well. It forked over nearly $1 billion late last year to stay current on the bond, even as Venezuela missed more than $10 billion in payments on other securities. But Maduro’s team has no intention of ponying up the cash now that Guaido has control of Citgo, according to a person familiar with the matter.

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