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Renxiang Wei
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I agree the formally identical but functionally different "uniformly applicable" standard would likely create a holdout of more than 25% bondholders with different maturity date than the rest. Unless the court is willing to read the text and interpret it as a formally different but functionally identical standard and allow NPV to play a role, CAC voting is the only conceivable method. However, the new Argentinian government should be cautious enough with this single-limb approach as it may have ripple effects on future loans in the international market.
I believe the lack of authorization from Venezuelan's legislature offers a valid defense for not honoring the PDSVA obligations, as Article 150 as already pointed out, especially with CITGO being the crown jewel of the nation's oil production and essential part of the hope to rebuild the crippling economy, which satisfied the requirement of "national public interest". The partial repayment earlier this year is not sufficient enough to be considered as evidence of adoption of the debt, especially since during the issuance and during the repayment period, wide spread protests were reported and sophisticated investors should or are expected to know this. I agree with Mr. Brage Humphries on his take about the possible moves of U.S. court. Seizure of CITGO will essentially crush the Venezuelan economy and vanish all hopes of rebuild and repayment. A U.S. court may consider the dire consequence of a humanitarian crisis in Venezuela and prevent the seizure. And other foreign countries may pressure the Venezuelan company not to give up so quickly as well. As reported in the following two articles, https://www.cnbc.com/2019/02/07/venezuela-china-and-russia-owed-debts-as-presidential-fight-rages.html https://nationalinterest.org/blog/buzz/china%E2%80%99s-oil-backed-loans-venezuela-appear-headed-haircut-43992 Both China and Russia hold significant lending interests in Venezuela, and China's lending to Venezuela is not necessarily secured by collaterals. The seizure of CITGO may crush Chinese creditors' hopes of getting any payments back. Therefore the outcome of the case may also depends heavily on the political leaning of the president of Venezuela.
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Oct 15, 2019