Goldman Sachs has just provided Venezuela’s government with about $865 million in cash, against about $ 2.800 million in bonds paying an interest rate of 12.75%, for a price about 31% of their face value. That, if the bonds were duly repaid, would produce an internal rate of return of around 48%.
Google “Goldman Sachs” and Venezuela, and you will observe the public uproar this operation has caused… almost everywhere.
This is a perfect opportunity to initiate a much-needed debate on what should be considered as odious sovereign debt, so as to therefore have its right of collection entirely or partially void. I have wanted that debate to take place for a very long time.
http://unsustainabledebtsustainability.blogspot.ca/2006/05/debt-sustainability-analysis-sdl.html
http://unsustainabledebtsustainability.blogspot.ca/2015/10/we-must-not-allow-vulture-funds-to.html
Lets face it. Goldman Sachs, to avoid further embarrassment, might sell this credit in the secondary market to a vulture funds that could try to collect 100% of the face value of these bonds plus all its interest.
So let me open this debate by asking:
Lloyd Blankfein, how much do you think someone should rightfully aspire to collect on your 2022 Venezuela bonds?
