Venezuelan sovereign bonds were valued at about 24.5 cents on the dollar in an auction to determine the payout for holders of credit-default swaps tied to the nation’s government debt.
The valuation means that buyers of protection will be paid $7.55 million for every $10 million they insured. There were a net $1.25 billion in outstanding credit swaps on Venezuela as of Dec. 1, according to JPMorgan Chase &Co..
A panel of credit derivatives dealers and investors ruled Nov. 16 that debt payment delays by Venezuela and its oil company, known as PDVSA, constituted “failure to pay” credit events. Bond rating agencies Fitch, S&P Global, and Moody’s Investors Service have also declared the issuers to be in default on their obligations.