Venezuela bonds on course to regain position on JPMorgan debt indices
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JPMorgan reveals that this step will include 20 Venezuelan sovereign and quasi-sovereign bonds of a total notional value of $53 billion.
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The logo for JPMorgan Chase & Co. appears above a trading post on the floor of the New York Stock Exchange in New York, Aug. 16, 2019. (AP)
Venezuela's sovereign bonds and those of state oil company PDVSA will re-enter JPMorgan's powerful rising market bond indices over a 3-month period starting from the end of April, the US bank revealed yesterday.
"Venezuelan Sovereign and Petroleos de Venezuela S.A. (PDVSA) bonds will be included in the EMBI Global/Diversified benchmarks over a three-month phase-in period starting April 30th and ending June 28th," JPMorgan stated.
It added that this step will include 20 Venezuelan sovereign and quasi-sovereign bonds of a total notional value of $53 billion.
This comes after the US Treasury Department decided in October to lift the almost 4-year ban on US investors preventing them from trading Venezuelan debt in the open bond markets. This decision put the bonds on "watch" for a possible restatement.
JPMorgan's EMBI indices are the primary global basis for dollar and other "hard-currency" denominated bonds issued by developing market countries. Hence, expanding Venezuela's weighting in these bonds will prompt buying by funds that track them as they are set to have a total estimated weight of 58 basis points in the EMBI Global Diversified and 69 in the EMBI Global.
Ever since the US imposed its sanctions on Venezuela in 2019, the bonds have had a zero weighting.
Co-chair of the Venezuela Creditor Committee and the founder of Greylock Capital Management Hans Humes stated, "I don't think they (JPMorgan) really had much wiggle room on this decision."
"If you take the weighting to zero when the sanctions are applied, you have to lift it again when the sanctions are lifted," he added.
JPMorgan revealed it had consulted over 100 asset managers before taking this step.
US sanctions have never scared Venezuela
On February 20, Venezuelan President Nicolas Maduro, during his weekly program, described the US as completely unreliable, stating, "We must rely on our own creativity, minds, ideas, work, strength, and capacity for innovation."
Maduro affirmed that his nation will soon become a member of BRICS, emphasizing the unstoppable shift toward a new global order and the strengthening of this alliance.
The Venezuelan President further underscored that no threat, warning, or sanction can halt the Venezuelan people, who "fought for independence against colonialism and to end any form of hegemony."
