In China, Venezuela Default Talk Is Front-Page News
Whether crisis-ridden Venezuela will default is a question increasingly on the minds of bond traders. It’s now also one that is getting front-page treatment from China, one of the Latin American country’s biggest financial backers.
On June 11, the People’s Daily -- the mouthpiece paper of China’s Communist Party -- published an article in its overseas edition with the headline “Will Venezuela Default?” After considering its willingness and ability to pay, the author concludes the answer is no and chalks up all the talk about default to media speculation. The article also makes the case for China, whose $3.2 trillion of foreign reserves are the world’s largest, to maintain its support to Venezuela.
“From a long-term perspective, it makes emotional and rational sense for the Chinese side to provide aid within our capacity for partners stuck in economic difficulty like Venezuela,” the article said.
Yet despite its apparent willingness to back Venezuela, Barclays Plc and Exotix Partners LLP are part of a growing group of market watchers that are skeptical that China is truly prepared to increase financing. Over the past decade, China has lent Venezuela about $50 billion, much of it intended to be repaid with oil supplies. But with Venezuela’s economy in tatters and political tensions rising, the country is struggling mightily to stay current on its debt.
http://www.bloomberg.com/news/articles/2016-06-16/in-china-venezuela-default-talk-is-front-page-news-amid-crisis
