Published: Sun, June 04, 2017
Finance | By Kristine Clayton

Goldman Sachs attacked for "strengthening the brutal repression" in Venezuela

Which is all to say that when Goldman Sachs bought $2.8 billion in state-issued Venezuelan bonds on the secondary market last week, the bank's calculations rested on facts, not feelings.

"Moreover, the fire sale nature of this transaction is clear evidence the Maduro regime did not have Venezuela's best interest in mind when conducting this operation", Borges wrote.

If Venezuela is not doing well economically, why is Goldman Sachs buying its bonds?

Maria Angela Holguin, Colombia's chancellor to the OAS, said in Spanish that coming up with a solution to the crisis in Venezuela is becoming "increasingly urgent".

Last week Goldman Sachs bought around $2.8 billion worth of bonds issued by Venezuela's state oil firm PDVSA, betting its investment could more than double if the opposition comes into power, The Wall Street Journal reported on Sunday.

The letter adds that Congress will open an investigation into the transaction and that he will recommend "to any future democratic government of Venezuela not to recognise or pay these bonds".

Videgaray has been sharply criticized by Maduro's government but has nonetheless pledged to use all diplomatic channels to help reach a peaceful political solution to the bloody crisis in Venezuela.

Maduro confirmed earlier this month that presidential elections would be held as scheduled by the constitution in 2018, while the country's National Electoral Board has scheduled regional elections for December 10, 2017.

Venezuela's oil-dependent economy, crippled by low oil prices, has been in recession for four years, and now faces shortages of food and medicine, with inflation thought to be about 800%. The opposition government has threatened that a successor government could forgo paying the debt.

Another opposition leader, Henrique Capriles, alleged that he and his entourage were "ambushed" and beaten by the Venezuelan National Guard at a protest in the capital, Caracas.

"This good business deal of Goldman Sachs is at our expense", said Diana Carvallo, a 65-year-old artist who splits her time between NY and Caracas. Venezuela's opposition, which has been urging Wall Street banks not to throw a financial lifeline to Maduro, alleges that the purchase represents an infusion of cash to the government.

Goldman's bond purchase is part of a strategy to increase positions in Venezuelan holdings, The Journal's sources said.

With the inefficient economic model in Venezuela struggling under a drop in the price of oil, the unpopular government led by Maduro has become more and more dependent upon asset sales or financial deals to bring in much needed foreign exchange.

The Venezuelan government hasn't made an global public bond offering in several years since capital markets are essentially closed to it as its economy has shrunk 27% in four years, its oil production has declined rapidly and investors have become increasingly anxious about the growing likelihood of default.

Goldman Sachs was the seventh-largest holder of PDVSA bonds as of March 31, according to data compiled by Bloomberg.

Venezuela's opposition is refusing to participate, saying the vote set for July is a sham, with biased rules to ensure the body is filled with Maduro supporters. "Maduro's brazen transition to authoritarian rule", said the Times.

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