Venezuela: Economy in a turmoil - Natixis

In view of analysts at Natixis, the story in Venezuela is beyond magical realism as a leftist dictator privileges bond payments over imports.

Key Quotes

“Bondholders get their coupons, the country starves. Whether you know it or not you are probably exposed to Venezuela if you hold an Emerging Market (EM) debt fund in USD.”

“In theory, investors should not focus in a country that only weights 2.5% in the EMBI Global index. Here is the catch, despite a low weight the country generates 25% of its carry and disposes of the world's biggest oil reserves. This has drawn the attention of Hedge Funds, Russia/China, the oil industry and Asset Managers.” 

“The story got even more complicated after President Maduro decided to consolidate power by electing an illegitimate Constituent Assembly. This has led to a series of sanctions from US authorities that have increased the financial pressure on the regime.”