The fallout from the Venezuelan bond restructuring has claimed a major victim in Goldman Sachs Asset Management, or rather some of the ‘muppets’ who trusted Goldman to invest their money. However, the route which led Goldman to losing a chunk of client money wasn’t just a case of bad judgement, being riddled with the usual mixture of greed, questionable ethics and government intervention. As we detailed in ‘Goldman Accused Of Funding Maduro’s Dictatorship’.
Goldman controversially purchased $2.8 billion of 2022 bonds in May 2017 in the state-owned oil producer PDVSA, for about $865 million – or about 31 cents on the dollar. This prompted Julio Borges, President of the National Assembly and head of Venezuela’s opposition, to accuse Goldman of ‘aiding and abetting the country’s dictatorial regime.’Borges threatened that any future democratic government would not recognise or pay on the bonds. In true Goldman fashion, however, the deal was just too lucrative to pass up, or so it seemed at the time, as Goldman paid a then 30% discount to other Venezuelan bonds with a similar maturity. Goldman’s ‘defence’ was that it did not buy the bonds directly from PDVSA, consequently it did not transfer funds directly to the Venezuelan regime.
This post was published at Zero Hedge on Nov 7, 2017.