US Markets

U.S. judge rules PDVSA's 2020 bonds are valid; Citgo still protected

Credit: REUTERS/IVAN ALVARADO

A U.S. judge on Friday ruled that Venezuelan state oil company Petroleos de Venezuela's 2020 bonds are "valid and enforceable," a court document showed, in a setback for opposition leader Juan Guaido.

Adds details, context

CARACAS, Oct 16 (Reuters) - A U.S. judge on Friday ruled that Venezuelan state oil company Petroleos de Venezuela's PDVSA.UL 2020 bonds are "valid and enforceable," a court document showed, in a setback for opposition leader Juan Guaido.

The bonds are backed by half of the shares in the parent company of U.S. refiner Citgo Petroleum CorpPDVSAC.UL, and Guaido's team had sued last year to declare the bonds invalid on the grounds that the Venezuelan government had issued them without the approval of the opposition-held National Assembly.

But the ruling does not pave the way for creditors to immediately seize shares in Citgo's parent. The U.S. government has used its sanctions on Venezuela, aimed at ousting President Nicolas Maduro, to prevent bondholders from taking such action through at least January 2021.

Guaido's team took control of Citgo last year after he was recognized by the U.S. government as Venezuela's rightful leader on the grounds that Maduro rigged his 2018 re-election. Guaido's overseas representatives stopped making payment on the 2020 bonds last year.

On Friday, United States District Judge for the Southern District of New York Katherine Polk Failla ruled that "a default has occurred" on the bonds, dismissing Guaido's argument they were not valid.

(Reporting by Luc Cohen in New York)

((luc.cohen@thomsonreuters.com; +58 424 133 7696; Reuters Messaging: Twitter: @cohenluc))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More