Venezuela’s Got $21 Billion. And Owes $21 Billion

[Zorro]

Of all the financial barometers highlighting the crisis in Venezuela, this may be the one that unnerves investors the most as oil sinks: The country's foreign reserves only cover two years of bond payments.

The government and state-run oil company owe $21 billion on overseas bonds by the end of 2016, an amount equal to about 100 percent of reserves. Those figures explain why derivatives traders aren't only betting that a default is almost certain but that it will most likely happen within a year.

The 48 percent collapse in crude in the past six months stripped President Nicolas Maduro of the one thing -- windfall profits for the country's No. 1 export -- that was preventing a full-blown crisis. Even before oil started sinking, the OPEC member had depleted 30 percent of its international reserves in the past six years, the result of billions of dollars of capital flight triggered by the socialist push implemented by Maduro's mentor and predecessor, the late Hugo Chavez.

"These are panic capitulation levels," Kathryn Rooney Vera, an economist at Bulltick Capital Markets, said in an e-mailed response to questions. "Oil's continued price decline is ratcheting up risk aversion to exporters, and even more so for an economy already as distorted as that of Venezuela."

http://finance.yahoo.com/news/venezuela-got-21-billion-owes-133046239.html

Can't see this situation ending gracefully. Wonder what Fidel and Raul are going to do about it.

[COLGATE4]

1. There's really not much Fidel and Raul can do to save

DimSuccessor's bacon. My guess is that they will have the military throw its support behind Diosdado and try and find some 'decorous' way of easing DimSuccessor out. Not that any of rearranging the deck chairs on SS Venezuela will make much difference. Unless there is an unexpected surge in oil in the short run, Venezuela has little option except to default and hope that, like Argentina, it can convince new investors to bite.

[Marksman_91]

2. Rumor has it they're preparing one of the Chavez daughters to replace Maduro

Of course, this would probably be against the Supreme Commander's will, and I'm sure nobody in the Cabello or Maduro family circle will like it either. I'm truly convinced that all the bighead families in the government hate each other with a passion, or at least loath each other, but they're not willing to let any signs of that show up since, you know, they're all pretty much dependent on each other to keep the Chavista regime system intact.

[COLGATE4]

3. Well, at least she won't have to go to the trouble

of moving into the Presidential Palace (seeing as how they refused to leave). I agree that all the leading Chavistas probably despise each other but, as the old saying goes they have to hang together in order to not hang separately. Still, I don't discount Diosdado - he's a true snake and has enormous support in the Military.