Like a legendary old fighter coming out of retirement for one last tournament, one of the bond market’s most feared raiders is planning to dust off his Bloomberg terminal to take on Venezuela.
Jay Newman, a former senior fund manager at Elliott Management — who retired last year after successfully hounding Argentina for more than a decade to extract a $2.4bn payout from the country — is contemplating a return via Venezuela’s debt crisis, according to people familiar with the matter.
The bond fund manager is precluded from working in the the sovereign debt sector until the end of 2018, when a “non-compete” clause he signed when leaving Elliott expires. Mr Newman earlier this year approached the hedge fund about voiding the clause but was turned down, according to people familiar with the matter, which has forced him to wait until next year.
Mr Newman declined to comment on what he might do once the non-compete clause expires, but said that he “categorically denies” talking to investors about investing in or advising on investments in Venezuelan debt.
Venezuela represents an enticing opportunity to hedge fund managers steeped in the intricacies of sovereign debt restructurings. Caracas last year admitted it could no longer service its $150bn pile of foreign debts, and since then has haphazardly defaulted on a host of bonds, loans and other financial obligations.
Other players in the sovereign debt industry expect that rather than return to front-line investing Mr Newman is most likely to be hired as some kind of adviser to one or several Venezuelan creditors, given his unique expertise in pursuing governments through the courts. At least one Venezuelan bondholder group has already approached the former hedge fund manager, according to people familiar with the matter.
In a recent interview with Bloomberg TV, Mr Newman said that Venezuela “has been impoverished by klepto-socialists” and warned that investors faced a “tortuous, long, complicated road”, something that some industry experts saw as an oblique, unofficial pitch of his know-how on navigating such a complex situation.
The US government has slapped a series of sanctions on individuals in the regime, such as president Nicolás Maduro, and on the country’s debt — in practice making any resolution to the country’s default extremely complicated and leaving Venezuela’s bonds in legal limbo.
Venezuelan bondholders, some of which are coalescing into a creditor group advised by Mark Walker of Millstein, have therefore refrained from legal action over the defaults, given how hard it is to seize government assets.
But ConocoPhillips’s $2bn legal award against PDVSA, Venezuela’s oil company, has stirred up the situation. PDVSA owns some of the few overseas assets that creditors could conceivably seize, so Conoco’s award could force at least some bondholders to join the legal fray, according to Robert Kahn, a professor at the American University and a former Treasury and International Monetary Fund official.
“Bondholders were holding fire, partly because they thought it would be a long, protracted process. But you’ll now see acceleration by some bondholders and more typical post-default litigation,” he said
. Io credo che, se col passare del tempo, l'attacco finanziario fatto partire da Trump non porti allo sperato change, qualcuno dirà al presidenta di fare un passo "di fianco" affinché consenta la ristrutturazione dei titoli, almeno i Soberanos. I politici si sentono onnipotenti e immortali i primi tempi, ma sanno che nella filiera sono i meno duraturi e saranno cambiati con la stessa facilità con cui si cambia biancheria sporca. Non dico che Trump non sia abile nel do ut des, ma prima o poi le pressioni arriveranno e anche questa situazione dovrà essere sanata. Buon pranzo!