Goldman under fire for buying Venezuela "hunger bonds"

Opposition Deputy Carlos Paparoni is hit by a jet of water during riots at a march to the state ombudsman’s office in Caracas Venezuela
Goldman under fire for buying Venezuela "hunger bonds"
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02 June, 2017

Japanese investment bank Nomura Securities bought about $100 million worth of Venezuelan government bonds last week as part of the same transaction that has landed Goldman Sachs Group Inc.in the thick of a political controversy. "We recognize that the situation is complex and evolving and that Venezuela is in crisis", the bank said.

Anti-government protestors say the situation is already out of control - and that the global community needs to intervene before it's too late.

Venezuela has been rocked over the last two months by widespread protests against Maduro's government that have left at least 60 people dead.

"No matter how hard they try, Goldman Sachs and his top executives can not embellish this deal, which is immoral for Venezuelans", Julio Borges, president of the Venezuela's opposition-controlled National Assembly, told El Nacional.

Goldman wasn't the only firm to do a private deal recently that helped the government raise funds. We made the investment in part because we believe it will.”.

PDVSA's $4 billion of notes due in 2027 gained 0.5 percent to 39.22 cents on the dollar as of 1:31 p.m.in NY, the highest level in four months.

Waving Venezuelan flags, a small group of protesters outside the United States banking giant's headquarters in Manhattan shouted "Goldman Sachs Sucks!"

The opposition-led National Assembly later on Tuesday voted to ask the U.S. Congress to investigate the deal, which they called immoral, opaque, and hypocritical given the socialist government's anti-Wall Street rhetoric. Shares of the company dropped 2 percent to $218.42 at 4 p.m., the biggest decline in the Dow Jones Industrial Average. They approached and one of them hit me several times in the head, then they pushed me and I fell.

"There is a lot of interest in this trade", Carlos de Sousa, an economist at Oxford Economics, a research company based in London, told the New York Times. "We are in a low-rate environment, and these are dollar bonds with really high yields".

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That's not to say that Goldman's investment is without a risk.

Venezuelan opposition accuses the government of mismanaging the oil-rich country, causing severe shortages of basic consumer goods. Venezuela's global reserves rose by $749 million on Thursday and Friday, reaching around $10.86 billion, according to the central bank.

Protesters carried signs that read "Goldman Sachs supports Maduro's dictatorship".

His term extends until January 2019 but Maduro has increasingly attempted to consolidate power, including calling for a new constituent assembly to reform the constitution.

A large majority of the country opposes President Nicolás Maduro.

Maduro has faced nearly two months of public protests while cutting imports of food and medicine to conserve cash and continue bond payments. Maduro says the protests are a violent effort to overthrow his government, and insists the country is the victim of an "economic war" supported by Washington. The bonds are expected to give more than 20 percent returns to its investors.

It said it "affirms that conflict resolution mechanisms will require all parties to fundamentally rethink the view they have of themselves and the other, in order to transform the now polarized debate into one about the people's common interests and objectives".

“It's very serious that money is given to a corrupt, repressive dictatorship and an worldwide bank gets off unscathed, ” lawmaker Carlos Valero, a member of the Venezuelan congress's finance commission, said as the bill was passed.


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