{"id":2555,"date":"2026-01-06T20:01:41","date_gmt":"2026-01-06T20:01:41","guid":{"rendered":"https:\/\/finzexpert.com\/blog\/venezuela-bonds-are-the-hottest-trade-on-wall-street-this-week-but-risks-remain\/"},"modified":"2026-01-06T20:01:41","modified_gmt":"2026-01-06T20:01:41","slug":"venezuela-bonds-are-the-hottest-trade-on-wall-street-this-week-but-risks-remain","status":"publish","type":"post","link":"https:\/\/finzexpert.com\/blog\/venezuela-bonds-are-the-hottest-trade-on-wall-street-this-week-but-risks-remain\/","title":{"rendered":"Venezuela bonds are the hottest trade on Wall Street this week, but risks remain"},"content":{"rendered":"\n<div id=\"RegularArticle-ArticleBody-5\" data-module=\"ArticleBody\" data-test=\"articleBody-2\" data-analytics=\"RegularArticle-articleBody-5-2\"><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"\/><\/p>\n<div class=\"InlineImage-imageEmbed\" id=\"ArticleBody-InlineImage-108248430\" data-test=\"InlineImage\">\n<div class=\"InlineImage-wrapper\">\n<div>\n<p>Demonstrators hold a large Venezuelan flag outside the National Assembly, on the day Vice President Delcy Rodriguez was formally sworn in as the country&#8217;s interim president, as U.S.-deposed President Nicolas Maduro appeared in a New York court after the Trump administration removed him from power, in Caracas, Venezuela Jan. 5, 2026. <\/p>\n<p>Maxwell Briceno | Reuters<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>Venezuela&#8217;s long-defaulted bonds are suddenly one of the hottest trades in emerging markets.<\/p>\n<p>Prices on the country&#8217;s benchmark notes due in October 2026 have surged to about 43 cents on the dollar, more than doubling since August. The rally comes as traders reassess recovery prospects on the distressed securities following the surprise removal of President Nicolas Maduro and a shift in U.S. policy that has opened the door to a potential restructuring of the nation&#8217;s debt.<\/p>\n<\/div>\n<div class=\"InlineImage-imageEmbed InlineImage-inlineInfographic\" id=\"ArticleBody-InlineImage-108248895\" data-test=\"InlineImage\">\n<div class=\"InlineImage-wrapper InlineImage-wrapperNoCaption\">\n<div class=\"InlineImage-imagePlaceholder\" style=\"padding-bottom:39.370078740157474%\">\n<div><button class=\"InlineImage-closeEnlargedImage\"><svg width=\"20\" height=\"20\" viewbox=\"0 0 20 20\" fill=\"#002F6C\" aria-labelledby=\"title desc\" role=\"img\" focusable=\"false\" data-analytic-id=\"expand-icon\" class=\"InlineImage-background\"><title>Zoom In Icon<\/title><desc>Arrows pointing outwards<\/desc><circle cx=\"10\" cy=\"10\" r=\"10\" fill=\"white\" stroke=\"#002F6C\"\/><path d=\"M9.20185 10.7982C8.96049 10.5568 8.57037 10.5568 8.32901 10.7982L5.67901 13.4482V11.2346C5.67901 10.8938 5.40308 10.6173 5.06173 10.6173C4.72037 10.6173 4.44444 10.8938 4.44444 11.2346V14.9383C4.44444 15.279 4.72037 15.5556 5.06173 15.5556H8.76543C9.10679 15.5556 9.38271 15.279 9.38271 14.9383C9.38271 14.5975 9.10679 14.321 8.76543 14.321H6.55185L9.20185 11.671C9.44321 11.4296 9.44321 11.0395 9.20185 10.7982ZM14.9383 4.44446H11.2346C10.8932 4.44446 10.6173 4.721 10.6173 5.06174C10.6173 5.40248 10.8932 5.67903 11.2346 5.67903H13.4481L10.7981 8.32903C10.5568 8.57038 10.5568 8.96051 10.7981 9.20187C10.9185 9.32224 11.0765 9.38273 11.2346 9.38273C11.3926 9.38273 11.5506 9.32224 11.671 9.20187L14.321 6.55187V8.76545C14.321 9.10619 14.5969 9.38273 14.9383 9.38273C15.2796 9.38273 15.5556 9.10619 15.5556 8.76545V5.06174C15.5556 4.721 15.2796 4.44446 14.9383 4.44446Z\"\/><\/svg><\/button><\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>Investors are betting that a faster-than-expected political transition along with a clearer path to asset recovery could unlock value that has been frozen for nearly a decade. Venezuela fell into default in late 2017 after failing to make payments on overseas bonds issued by both the government and its state-owned oil producer PDVSA. Fidelity Investments and\u00a0T. Rowe Price are among the holders that own significant amounts of these defaulted bonds, according to reports.<\/p>\n<p>Donato Guarino, an emerging-market strategist at Citi, said uncertainties remain particularly given lingering questions about the new government&#8217;s political alignment with Washington.<\/p>\n<p>&#8220;To the Trump administration, it&#8217;s key to extract the oil reserves the Venezuela has at the moment. That means that the GDP of Venezuela will go higher. That means that the ability to pay bondholders will be higher,&#8221; Guarino told CNBC. &#8220;However, in the short term, you may see some risks because what Trump did is a big gamble&#8230;\u00a0there is a question of loyalty of the current new president towards Trump.&#8221;<\/p>\n<p>Trump has, in recent days, said the U.S.\u00a0would &#8220;run&#8221;\u00a0Venezuela, threatened Colombia and Cuba and renewed his push to acquire\u00a0Greenland. Those remarks followed a weekend military strike that captured Maduro from Caracas and whisked him to the U.S. to face criminal charges without prior congressional authorization.\u00a0<\/p>\n<\/div>\n<h2 class=\"ArticleBody-subtitle\">Big risk remains<\/h2>\n<div class=\"group\">\n<p>Barclays upgraded Venezuela bonds to market weight after rapidly unfolding political developments altered its outlook.<\/p>\n<p>The Wall Street firm also cautioned that the scale and complexity of Venezuela&#8217;s debt overhang could cap upside from here. Venezuela and PDVSA together have $56.5 billion of unsecured eurobonds outstanding, Barclays said. Including past-due interest, total bondholder claims rise to $98.3 billion, or roughly 119% of GDP, based on the IMF&#8217;s 2025 GDP projection.<\/p>\n<p>The bank said recovery values could vary widely, noting that Venezuela&#8217;s economy is now about 30% smaller and oil production has nearly halved over the past eight years. As a result, ultimate recoveries will depend heavily on how quickly the economy and oil sector can rebound in the years ahead.<\/p>\n<p>Jeffrey Sherman, deputy chief investment officer at DoubleLine, believes the rally may be running ahead of reality. <\/p>\n<p>&#8220;There&#8217;s still a lot of risks there. you have this kind of continuation right now of the leadership there,&#8221; Sherman said Tuesday on CNBC&#8217;s &#8220;Money Movers.&#8221; &#8220;We&#8217;ll see how that transitions are talking about elections and things. So again, I think it&#8217;s way too early to get too excited about that, especially as a debt investor.&#8221;<\/p>\n<\/div>\n<div role=\"region\" aria-labelledby=\"Placeholder-ArticleBody-Video-108248819\">\n<div role=\"button\" tabindex=\"0\" id=\"Placeholder-ArticleBody-Video-108248819\" class=\"PlaceHolder-wrapper\" data-vilynx-id=\"7000399999\" data-test=\"VideoPlaceHolder\">\n<div class=\"InlineVideo-videoEmbed\" id=\"InlineVideo-0\" data-test=\"InlineVideo\">\n<div class=\"InlineVideo-wrapper\">\n<div class=\"InlineVideo-inlineThumbnailContainer\"><span class=\"InlineVideo-videoButton\"\/><span\/><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>The recent developments in Venezuela could also prove a major win for Elliott Investment Management, the firm founded by billionaire investor Paul Singer. Less than two months ago, the investor, known for striking lucrative deals in high-risk markets, won U.S. approval for a $6 billion bid for Citgo Petroleum, the refining firm owned by state-run PDVSA.<\/p>\n<p><em>\u2014 With assistance from Gina Francolla<\/em><\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Demonstrators hold a large Venezuelan flag outside the National Assembly, on the day Vice President Delcy Rodriguez was formally sworn in as the country&#8217;s interim president, as U.S.-deposed President Nicolas Maduro appeared in a New York court after the Trump administration removed him from power, in Caracas, Venezuela Jan. 5, 2026. Maxwell Briceno | Reuters [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":2556,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[662,2534,261,1872,849,407,2513,848,258],"class_list":["post-2555","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan","tag-bonds","tag-hottest","tag-remain","tag-risks","tag-street","tag-trade","tag-venezuela","tag-wall","tag-week"],"_links":{"self":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/2555","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/comments?post=2555"}],"version-history":[{"count":0,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/posts\/2555\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media\/2556"}],"wp:attachment":[{"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/media?parent=2555"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/categories?post=2555"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finzexpert.com\/blog\/wp-json\/wp\/v2\/tags?post=2555"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}