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Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

nytimes.com

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Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#11

Post by pyvpx »

Retric wrote: post #9
bobcostas55 wrote: post #7

Earlier quoted context omitted.

>As happened in Greece Greece had the largest default in history[0], virtually all private debt holders were forced to take a ~70% haircut. [0]: https://en.wikipedia.org/wiki/Private_sector_involvement

That 'haircut' is based on interest assumptions not actual costs. The actual haircut was only 53.5% of the face value so if you bought it from someone else at a higher discount you made significant profit. Assuming you sold it or there will be no second default.

I humbly suggest reading the book "Debt: The First 5000 Years"

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#12

Post by eeasss »

DarkKomunalec wrote: post #3
TorKlingberg wrote: post #2

It looks like Goldman Sachs is betting that Venezuela will sort it self out by 2022, and getting a good discount. I'm not sure how that is “making a quick buck off the suffering of the Venezuelan people”, or how the people would benefit if nobody buys the bonds.

As happened in Greece, such purchases result in pressure applied to the country to pay off its debts, rather than help its people. It's good in the short term, but in the long term, government debt ends up as a massive transfer of capital to the lenders.

The purchases happened at the secondary market. This means that this bond are already issued... this means that what you say above is not true.

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#13

Post by tyingq »

TorKlingberg wrote: post #2

It looks like Goldman Sachs is betting that Venezuela will sort it self out by 2022, and getting a good discount. I'm not sure how that is “making a quick buck off the suffering of the Venezuelan people”, or how the people would benefit if nobody buys the bonds.

The original letter has more detail as to why Borges believes that. I'm no expert, so I have no idea if it's plausible. On the other hand, if I were a citizen suffering under Maduro's regime, I'd be pissed at any sort of foreign investment that Maduro could spend as he wanted.

In short, "provides a financial lifeline to his authoritarian regime" and "desperate desire to gain resources needed to secure weapons and other instruments of oppression..."

Page 1: https://pbs.twimg.com/media/DBAqsdZXkAEVKgF.jpg

Page 2: https://pbs.twimg.com/media/DBAqtrDXYAABc9H.jpg

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#14

Post by raverbashing »

xbmcuser wrote: post #5
raverbashing wrote: post #4

Earlier quoted context omitted.

Yeah. But don't bet on the current government doing that. Quite the contrary Or even the next This is pure speculation

Banks control western politicians who will put who ever is in power under pressure to pay of the debt. I used to think people that talk like that are same as the ones that wear tin foil hats. But the last 6-7 years has made me realise that they are not completely bat shit crazy. And the world of power is power is most corrupted and the least in the news.

That works if:

- The concerned politician has a slight sense of responsibility (even though paying banks first is less responsible to the people but has long-term goals)

- The concerned country has a minimal ability to pay

Venezuela has neither at this moment

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#15

Post by DarkKomunalec »

eeasss wrote: post #12
DarkKomunalec wrote: post #3

Earlier quoted context omitted.

As happened in Greece, such purchases result in pressure applied to the country to pay off its debts, rather than help its people. It's good in the short term, but in the long term, government debt ends up as a massive transfer of capital to the lenders.

The purchases happened at the secondary market. This means that this bond are already issued... this means that what you say above is not true.

Where the bonds were purchased does not affect Goldman's ability or motivation to pressure Venezuela.

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#16

Post by posterboy »

xbmcuser wrote: post #5
raverbashing wrote: post #4

Earlier quoted context omitted.

Yeah. But don't bet on the current government doing that. Quite the contrary Or even the next This is pure speculation

Banks control western politicians who will put who ever is in power under pressure to pay of the debt. I used to think people that talk like that are same as the ones that wear tin foil hats. But the last 6-7 years has made me realise that they are not completely bat shit crazy. And the world of power is power is most corrupted and the least in the news.

For a second I read that as "western politicians who will put in power whoever ..."

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#17

Post by tgb »

tyingq wrote: post #13
TorKlingberg wrote: post #2

It looks like Goldman Sachs is betting that Venezuela will sort it self out by 2022, and getting a good discount. I'm not sure how that is “making a quick buck off the suffering of the Venezuelan people”, or how the people would benefit if nobody buys the bonds.

The original letter has more detail as to why Borges believes that. I'm no expert, so I have no idea if it's plausible. On the other hand, if I were a citizen suffering under Maduro's regime, I'd be pissed at any sort of foreign investment that Maduro could spend as he wanted. In short, "provides a financial lifeline to his authoritarian regime" and "desperate desire to gain resources needed to secure weapons and oth…

It's not directly useful for Maduro. They bought the bonds in the secondary market for a seventy percent discount. Maduro made no money off the sale. And at that large of a discount I don't think he'll have an easy time selling new bonds to anyone either.

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#18

Post by shaqbert »

devoply wrote: post #10

Goldman is not betting Venezuela will sort itself out. Goldman is betting it can extort the future government of Venezuela out of money it does not have if it wants funding from IMF or the World Bank. The justification they are giving is that they bought it off a secondary market...

With the government owned oil co being the issuer, this looks like a pretty smart bet by Goldman.

If oilco does not default, great, you get a ridiculous discount and a high coupon.

If oilco does default, great, you have ample of collateral in tankers and other tangible assets you might be able to recover, so the recovery rate will be higher than the 30 cents that Goldman paid on the dollar. Also, whatever happens with the venezuelan government, the new government will also want to have a functional oilco.

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#19

Post by tyingq »

tgb wrote: post #17
tyingq wrote: post #13

Earlier quoted context omitted.

The original letter has more detail as to why Borges believes that. I'm no expert, so I have no idea if it's plausible. On the other hand, if I were a citizen suffering under Maduro's regime, I'd be pissed at any sort of foreign investment that Maduro could spend as he wanted. In short, "provides a financial lifeline to his authoritarian regime" and "desperate desire to gain resources needed to secure weapons and oth…

It's not directly useful for Maduro. They bought the bonds in the secondary market for a seventy percent discount. Maduro made no money off the sale. And at that large of a discount I don't think he'll have an easy time selling new bonds to anyone either.

Makes sense, but I still see the reason oppressed people would make a stink.

If only to broadcast that it will be bad optics for any foreigner to support the current regime...or even appear to. Propaganda is likely going on both sides.

Re: Goldman Buys $2.8B Worth of Venezuelan Bonds, and an Uproar Begins

#20

Post by whatok »

tgb wrote: post #17
tyingq wrote: post #13

Earlier quoted context omitted.

The original letter has more detail as to why Borges believes that. I'm no expert, so I have no idea if it's plausible. On the other hand, if I were a citizen suffering under Maduro's regime, I'd be pissed at any sort of foreign investment that Maduro could spend as he wanted. In short, "provides a financial lifeline to his authoritarian regime" and "desperate desire to gain resources needed to secure weapons and oth…

It's not directly useful for Maduro. They bought the bonds in the secondary market for a seventy percent discount. Maduro made no money off the sale. And at that large of a discount I don't think he'll have an easy time selling new bonds to anyone either.

70% of par, 30%~ from where they were trading throughout the month.
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