Nomura Securities thinks Venezuela is sleepwalking into default:

The current level of imports already produces acute stagflation with any reduction from current levels not politically or socially viable for aggravating the economic crisis. The financing gap is so extreme that it would take a collapse in imports from an estimated $32bn in 2015 to near zero this year. The debate is quickly shifting from a willingness to pay to an inability to pay even under the Maduro Administration, especially as oil prices fail to recover to a minimum breakeven level of $65/barrel […]

We have not seen any coherent approach to policy management that would suggest a thoughtful approach to debt default. Instead, our base case remains an accidental default with cashflow stress that eventually forces non-payment later in the year on the bulkier debt maturities. This then risks a disorderly default with markets referencing the last sovereign default with Argentina trading below 20 on the limited liquidity and one sided selling against the backdrop of an economic and political crisis.

In its note about it Bloomberg prattles on about “accidental default”, inexplicably flubbing the obvious play-on-words – an oversight we’ve corrected in our own headline here.

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