A ‘ripe’ time to visit Moscow?

Venezuela´s presidential jet is fuelling up for President Nicolas Maduro´s next tour of Opec and non-Opec countries. The itinerary is still under wraps, but if the past is any guide, the jet will touch down in Moscow. That could happen right around the time national oil company PdV defaults on its debt.

PdV has run out of cash. Energy minister and PdV chief executive Eulogio Del Pino and his trusted team have failed to persuade bondholders to participate in a proposed restructuring of near-term debt, and they are warning of dire consequences.

With less than $12bn in hard currency reserves, the Venezuelan government looks to be teetering on a precipice. But appearances can be deceiving. The regime has repeatedly defied apocalyptic predictions in the past, maneuvering politically and financially to face down adversity after oil prices tumbled in 2014.

If PdV doesn’t manage to pull another rabbit out of its tattered hat, an orderly default process shrewdly designed to insulate the distressed company´s assets from creditor seizure might be the most sensible course of action.

Yet Maduro and his cadre would leave the fine print of any such procedures to their lawyers, bankers and strategic advisers. The regime is undoubtedly more preoccupied with the enormous political fallout of effectively bankrupting PdV, Venezuela´s economic lifeblood.

Once the wheels are up, Maduro at least gets a chance to change the subject, as he knocks on doors in Riyadh and other oil capitals to urge concerted action aimed at accelerating an oil price recovery.

PdV is obligated to start making hefty debt payments next week, a full month before the 30 November formal Opec meeting that will determine whether the cartel lives up to its September pledge to restrain production. In the interim, one has to wonder whether the option of a unilateral cessation of payments rather than an orderly default is gaining adherents in Venezuela’s besieged presidential palace. Moscow, such thinking would go, might not be a bad spot for Maduro to make that call. Don’t expect a tidy denouement.

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