Chavez’s economic program did everything but work 5 Mar 2013 The Venezuelan strongman won elections regularly and his populist economics played well at home. His rule coincided with a giant surge in oil prices, helping avoid bankruptcy. Yet Chavez’s policies alienated foreign investors as well as governments and kept Venezuelans poor.
Brewing Latam defaults could prompt 1980s re-run 5 Mar 2013 Argentina may stop all debt payments to avoid paying holdout creditors from its last default 11 years ago, and Venezuela’s credit looks shaky. The danger is that one failure to pay sparks others in the region, and even virtuous borrowers like Colombia are cut off from credit.
Venezuela takes step toward currency ruin 11 Feb 2013 Hugo Chavez claims his policies are original, but a 32 pct devaluation of the bolivar follows the pattern of Argentina and others before 1995. Government largess and inflation fuel further devaluations and more price increases. It’s a well-worn path to hyperinflation.
Venezuelan political folly is a cue for investors 10 Jan 2013 Allies of ailing Hugo Chavez seem to be taking even greater liberties interpreting the constitution than expected. There’s no inauguration, caretaker government or sign of a new election. If markets truly hate uncertainty, then animus toward Venezuela should be off the charts.
Warning to investors: Chavismo doesn’t need Chavez 17 Dec 2012 A big win for the Venezuelan president’s allies in regional elections, despite his absence for cancer treatment, hints at the popularity of his approach. Anyone hoping that Chavez’s successor will have to ditch his ideology for more market-friendly policies should take note.
Hugo Chavez gets chance to do more economic damage 8 Oct 2012 Before Sunday’s election, some of Venezuela’s creditors thought the ailing strongman would lose. His easy win gives him six more years to take over industries like mining and food and squeeze the oil sector further. Bondholders can expect the Chavez discount to return.
Do Venezuela debt investors have a death wish? 3 Oct 2012 They’re pushing the country’s 10-year yields to near-historic lows, in what looks like a bet on Hugo Chavez losing at the ballot box or succumbing to illness soon. But neither he nor his policies will be easily unseated. That could mean bond buyers are planning their own funeral.
Chavez’s cash pump PDVSA runs on empty 6 Sep 2012 Venezuela’s troubled oil group may now pay suppliers with IOUs instead of cash. That’s not surprising because Hugo Chavez is using PDVSA to finance social spending ahead of elections. Harder to imagine is what happens when oil prices decline from today’s lofty heights.
Refinery explosion emblematic of Hugo Chavez curse 27 Aug 2012 The blast hobbled PDVSA’s largest plant. The Venezuelan leader’s policy of placing loyalty before commercial prowess may not have caused the accident. But it has warped the nation’s business ethos. Recent moves like saddling the oil company with a weak partner make matters worse.
Chevron doubles down on Chavez staying power 20 Jul 2012 Venezuela’s bond yields have gyrated with investors’ changing views of the strongman’s cancer survival odds. But Chevron’s $2 bln loan to the state oil giant is a clear bet on Chavez’s re-election and survival. His shadow may darken the nation’s economic outlook for a while yet.
OPEC spendthrifts can’t blame cheap oil for woes 6 Jul 2012 Venezuela and Iran want an emergency cartel meeting, claiming overproduction is depressing prices. But despite the recent fall, crude is, at $98 a barrel, near its highest level in decades. Only profligacy prevents OPEC nations balancing their budgets at that price.
A post-Chavez Venezuela is no investment bonanza 8 May 2012 Despite breaking another long silence, the president has markets morbidly optimistic about his poor health. The country’s debt is soaring in value. But any new government will still struggle with backward Chavez policies. Unwinding years of economic mismanagement won’t be easy.
Oil majors can’t afford to shun Argentina 20 Apr 2012 Beyond the YPF asset grab, Cristina Fernandez may overhaul the entire energy sector. But Argentina’s shale is too important to ignore and Big Oil knows how to navigate tricky regimes, including Venezuela’s. Even with risks higher and returns lower, the long game could pay off.
Anti-Chavez Capriles won’t solve Venezuela’s woes 14 Feb 2012 Misguided policies brought decline for decades before Hugo Chavez’s 1998 arrival. A win for Henrique Capriles might restore investor confidence, but he’d face huge debts and a populace accustomed to state handouts. Unless oil goes to $200 - and sticks - his task looks thankless.
Chavez tests limits of resource nationalism 23 Jan 2012 The Venezuelan president nationalised foreign operators in 2007 and now threatens not to pay them as much as the international arbitrator orders. Such bravado might play well at home, but escape is almost impossible. Creditors can easily seize the state’s ample overseas assets.
Is Hugo Chavez ahead of the investment curve? 17 Aug 2011 Venezuela plans to move billions of cash reserves from developed nations to BRIC countries, according to media reports. This may reflect politics, or the need to keep creditors sweet. But given U.S. and EU budget and bank woes, Chavez may not be alone seeking alternatives