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US Ban On New Venezuelan Debt Could Scare Off So-Called Vulture Investors

US Ban On New Venezuelan Debt Could Scare Off So-Called Vulture Investors

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The Trump administration’s ban on new Venezuelan debt could scare off so-called vulture investors, who are typically hedge funds that swoop into a country’s distressed debt shortly before or in the aftermath of a default with the goal of extracting value from bonds too toxic for most investors.

The ban in effect makes it nearly impossible for the country to restructure its obligations, which means in the event of default the country and its creditors may struggle to come up with an agreement that would assign any value to its outstanding bonds.
It also will make smaller debt swaps much more difficult to get done, possibly hastening the day of reckoning. BM

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