A group of private creditors holding Venezuelan bonds has started the process to hire a financial adviser as it ramps up efforts to kick off a $60 billion debt restructuring. The Venezuela Creditor Committee began evaluating proposals from firms such as Houlihan Lokey and Ankura Consulting Group LLC this week, with a decision potentially coming as early as next week.
Separately, the group chose Houlihan Lokey as its financial adviser in February, a crucial step towards a large-scale debt restructuring. As of March, VR Capital Group and Fidera Ltd. joined the committee, bringing the group's control to approximately half of Venezuela's $60 billion in defaulted dollar bonds. Ashmore Group, a major holder of sovereign and Petróleos de Venezuela SA bonds, also joined the group last year.
The committee, formed in late 2018, previously retained Orrick, Herrington & Sutcliffe as its legal advisor last year. Other members include Greylock Capital Management, Grantham, Mayo, Van Otterloo & Co. LLC, Mangart Capital, T. Rowe Price Associates Inc., and Fidelity Investments. The total external debt for Venezuela is estimated at $60 billion in dollar bonds, plus an additional $40 billion in accrued interest, with the country defaulting on bonds for the first time in 2017.
While bond prices saw a 24% return this year for investors betting on a normalization of international relations, compared to an average 2.5% for emerging market high-yield debt, the prospects of a debt restructuring are complicated by U.S. sanctions and shifting political sands regarding Venezuela. The country is seeking to restructure an estimated $170 billion in bonds, loans, and other claims, with some estimates placing the total debt, including recent disaster damages, at around $240 billion. A successful renegotiation is crucial for Venezuela to regain access to international markets and attract new investment.
