Reuters - Small funds eyeing big gains pile on Venezuela debt

Small funds and investors outside the United States are looking to increase their exposure to Venezuelan bonds, on the expectation of debt renegotiations or of legal action tied to a looming expiry of repayment rights

Many of the bonds are trading at pennies on the dollar after a default in 2017, compounded by 2018 sanctions from Washington that barred any American from trading Venezuelan debt…

Funds such as Altana Credit Opportunities Fund, based in London; Copernico Recovery Fund, in the Cayman Islands; Canaima Capital Lux, in Luxembourg; and Auriga Global Investors, a brokerage housed in Madrid, have been buying bonds from holders who have not collected principal and interest for almost six years.

THE BUYERS

"More and more people invest money in our fund each month, the more optimistic they are on the time scale," said Lee Robinson, CIO of Altana Credit Opportunities Fund.

"You want to be long Venezuela and PDVSA. Even on a 10-year view, it's a great trade. The recovery is going to be significantly higher than almost any other distressed sovereign that is out there at the moment," Robinson added.

Other distressed sovereigns include Ukraine, Ghana and El Salvador, among others.

Altana filed repayment claims in 2020 and has continued to buy Venezuela and PDVSA bonds, of which it said it holds over 1% of the total outstanding debt, over $500 million at par value.

"We filed our claims in the U.S. courts and none of the other European funds have done that as yet," Robinson added.

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