Good luck seizing our accounts in China, suckers!

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Marianna Párraga has an absolute must-read of a deep dive for Reuters into the PDVSA Default debate. She sees default as likely-but-far-from-a-given, and chronicles PDVSA’s damage-limitation strategies in case October or November witness an “Event“.

It’s hard to pick a pull quote for this one because every graf is so interesting, but this bit really jumped out at me:

PDVSA has taken steps recently to protect itself, including moving the accounts that collect money from its exports to China’s CITIC Bank (601998.SS) from Banco Espirito Santo (BESN.D).

Getting a court order to freeze an account in China would be more difficult than acquiring access to those in the United States.

16 COMMENTS

  1. Not totally convinced there existed a Bank of the Holy Spirit I did a Google search and indeed, it was recently bailed out and chopped up due to “painful acts of ruinous management”. Sounds like the ideal lender for PDVSA.

  2. Banco d Spirito Santo of Portugal has been one of the banks most used by Pdvsa in recent years , really weird for an international oil company of Pdvsa’s scale to use this kind of bank as much as it has , a couple of years ago the bank ran into a spot of trouble and accusations were made of fraudulent practices by the Bank Owners , The Portuguese Banking authorities had to come to their rescue . Now moving Pdvsa accounts to China makes them pretty much impenetrable to creditors wanting to seize any Pdvsa deposits …… Still it would be foolhardy indeed for the regime to expose Pdvsa to the many different lines of attack that creditors can use in the case it incurrs in default of its international financial obligations ….!!

  3. off topic: By the way Pdvsa is reported to have made a deal with the Russians to sell them a 40% stake in what used to be the Exxon Mobiil joint venture , a deal presumably involving a very sizable payment to Venezuela. This is very strange inasmuch as some 4 years ago the Russians loaned Pdvsa 2000 million USD which have never been paid . My guess is that the transfer of this stock to the Russians serves both as payment to the russians of what is owed to them and maybe as allowing a small loan to allow that companys oil field to continue operations ……….. !!

  4. Off topic, but bad as this money situation is, the recent article in El National per the energy sector is terrifying: http://www.eluniversal.com/nacional-y-politica/160227/national-power-grid-nearing-collapse

    It also underscores the fact that El Nacional is no longer afraid to print report utterly damming to the Chavistas, as this one surly is. One thing is for sure – if the energy sector tanks, or is compromised much further, the results will be grave indeed, with many reduced to indoor camping in their houses, with not water, electricity/light, etc. Road signals will go down, computer will not operate, public transit will grind to a halt in all from outlying areas. No gas will be pumped. Pretty much a total shut down of modern world facilities.

  5. If PDVSA is depositing money in China, that means that the GOV has no intention of giving China the short end of the many Venezuela-China deals.

  6. The Reuters story information actually came from an article by Jonathan Wheatley quoting Russ Dallen in the Financial Times 2 days earlier on Thursday:

    “The other development concerns the collapse in 2014 of Portuguese bank Espírito Santo, which formerly processed payments for PdVSA. Since then, PdVSA has switched its business to Citic Bank of China.

    ‘How would the Chinese react if there was a western order to seize Venezuelan accounts?’ asks Mr Dallen. ‘Would they protect their client or play by western rules? It would be a real test.’”

    http://www.ft.com/cms/s/3/bea8fcbc-dbbc-11e5-a72f-1e7744c66818.html

  7. Entonces aquí viene el problema, qué vamos a hacer cuándo a los Chinos no les podamos pagar tampoco? Porque eventualmente pasará. Y más si un nuevo gobierno viene

  8. Venezuela sucked dry by the Cubans has now been bartered in exchange of negotiation provisions between the US, Cuba the Vatican and China…

    Pero tenemos patria.

  9. […] ベネズエラ政府は今、デフォルトを避けようとあらゆる資産を叩き売っています。これで得た外貨はウォールストリートや中国などの債権所有者に行き、病に苦しむ国民には一銭も残らないことが懸念されています。野党派は近々ベネズエラは医療関係で人道支援が必要になると訴えています。 […]

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