By Mayela Armas and Marianna Parraga
CARACAS (Reuters) – Venezuela’s opposition-led National Assembly on Tuesday approved a proposal by committees overseeing the country’s foreign assets to extend for five years the validity of billions of dollars in defaulted bonds issued by the government and state firm PDVSA.
The proposal opens the door to negotiations for debt repayment and restructuring, reducing the risks of additional legal actions in U.S. courts, where creditors have flocked to enforce awards related to expropriation cases and defaulted payments by Venezuela.
“It is necessary that, before the peremptory expiration date, since bondholders see opportunities to sue to obtain compensation… the National Assembly agrees to extend the bonds’ expiration date,” said lawmaker Jose Salazar during the session.
The decision’s main goal is to achieve an “organized financial restructuring” of Venezuela’s about $60 billion in external debt, so it encourages bondholders to avoid legal action during any debt restructuring talks.
President Nicolas Maduro and PDVSA made a similar move earlier this year. But since Maduro’s government is not recognized by Washington, talks with bondholders to suspend statute of limitations on the debt have not progressed much.
Venezuela has two congresses, but only the one controlled by the opposition is recognized abroad and has received U.S. authority to negotiate any external debt payments. Following U.S. oil sanctions on the South American country in 2019, the opposition-led National Assembly has appointed commissions and boards to oversee Venezuela’s foreign assets.
The Maduro administration halted payments to bondholders in 2017. In October, the default will have completed its sixth year, triggering legal options to claim the money.
The bonds’ extension and any possible negotiations with bondholders, which are pending U.S. approval, do not imply that Venezuela would resign its right to foresee legal action to protect assets if necessary, according to the agreement.
(Reporting by Mayela Armas and Marianna Parraga; Editing by Gary McWilliams and Jonathan Oatis)
