Venezuela Puts Its Hidden Debt Near $240 Billion

Markets

Key Facts

—The new number. Caracas is preparing to disclose total obligations of about $240bn, well above the $150bn–$170bn range analysts had used.

—The framework. Adviser Centerview Partners is expected to publish a debt-sustainability roadmap in early July and a macro framework sizing the economy near $100bn.

—The ratio. Those figures would put debt above 200% of gross domestic product, among the heaviest burdens ever taken into a restructuring.

—The recovery. Central-bank data show first-quarter oil exports of $5.49bn, the highest since 2018, and a balance-of-payments surplus of $2.45bn.

—The bond bet. Defaulted sovereign and PDVSA bonds have roughly doubled since the start of the year as investors wager on an eventual deal.

—The catch. A bigger debt number usually means a deeper writedown, so the disclosure could test the rally rather than reward it.

The size of the Venezuela debt has always been a guess. Caracas is about to replace the guess with a number, and the number is bigger than almost anyone wanted to hear.

For years, working out how much Venezuela owed the world was a matter of estimation. Analysts settled on a range of roughly one hundred and fifty to one hundred and seventy billion dollars and built their models around it.

That range now looks too low. People briefed on the work say Caracas is preparing to disclose obligations of around two hundred and forty billion dollars, a figure that would reshape the largest sovereign debt workout ever attempted.

Why the Venezuela debt keeps growing

The jump is less about new borrowing than about honest accounting. Defaulted government and oil-company bonds make up the largest single block, but they are only part of the pile.

On top of the bonds sit nearly a decade of unpaid interest, loans from China and Russia, court awards from seized foreign assets, and unpaid bills to suppliers. Counted together, the total climbs far beyond the headline bond figure.

The financial adviser doing the counting is Centerview Partners, the New York boutique hired to steer the process. It is expected to publish a roadmap in early July, alongside a macro framework sizing the battered economy at around one hundred billion dollars.

Put those two numbers side by side and the problem is plain. Debt of two hundred and forty billion against an economy of one hundred billion implies a burden above two hundred per cent of annual output, a weight few countries have ever carried into talks with creditors.

The case that Venezuela can pay

The optimists point to the oil. Central-bank figures for the first quarter show petroleum exports of nearly five and a half billion dollars, the strongest since 2018, according to the central bank’s balance-of-payments report.

The same data show a balance-of-payments surplus of about two and a half billion dollars and rising reserves. After years of isolation, more dollars are flowing in than out.

That recovery is the heart of the investment case. The thinking on Wall Street is that a country sitting on the world’s largest oil reserves, now selling more crude, can eventually grow into a debt it cannot service today.

It is why defaulted Venezuelan and oil-company bonds have roughly doubled in price since January, and why investment banks have kept upgrading their view of the paper through the spring.

What a bigger Venezuela debt means for bondholders

Here is the uncomfortable arithmetic. A larger debt figure usually points to a deeper haircut, the cut in value creditors must accept for a deal to add up.

So the very disclosure that brings honesty to the process may also puncture the rally that anticipated it. Investors who bid prices up on hope now face a number that argues for caution.

There is a further complication unusual for a workout this size. The roadmap is being written without the International Monetary Fund, the body that normally certifies whether a country’s debts are sustainable.

For a London or Frankfurt investor weighing a position, the lesson is patience. The early-July documents will set the real terms of the debate, and a deal that looked close at a lower number may stretch well into 2027.

How this Venezuela debt compares with past deals

The scale only registers against history. Argentina’s landmark restructuring two decades ago covered roughly one hundred billion dollars and still took years of court fights to resolve.

A Venezuelan figure near two hundred and forty billion would dwarf that, and the structure is messier. The claims span bonds, bilateral state loans, arbitration awards and supplier bills, each with its own rules and its own creditors.

Many of the old bonds also lack the modern clauses that force reluctant holders into a deal once most creditors agree. That raises the risk of holdouts who reject any offer and chase full repayment through the courts for years.

For the wider region, the outcome will matter beyond Caracas. A Venezuelan template, for better or worse, would set the reference point for any future workout in Argentina, Ecuador or Cuba.

Frequently Asked Questions

How big is the Venezuela debt now thought to be?

People briefed on the restructuring say Caracas will disclose obligations of about two hundred and forty billion dollars. That is well above the earlier consensus of one hundred and fifty to one hundred and seventy billion.

Why does a higher Venezuela debt number worry investors?

A bigger debt against a small economy implies a deeper writedown for creditors. The disclosure could therefore challenge the bond rally that has run ahead of the official figures all year.

When will the restructuring terms become clear?

Adviser Centerview Partners is expected to publish a debt-sustainability roadmap and a macro framework in early July. Those documents should set the real terms, though a completed deal may not arrive until 2027.

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