By Rodrigo Campos
Venezuela, a debt-defaulted nation with an economy devastated by years of mismanagement and international sanctions, has become a surprise darling of bond investors, with returns for its dollar bonds of over 80% poised to lead emerging markets this year.
The surge in prices to six-year highs, on the back of renewed expectations for a change of government, is warranted according to investors. But as declines on Thursday show, the duration of the rally is in doubt.
“I think it’s justified, but in terms of how much further you can go, it is a question of what comes next with respect to U.S. action,” said Kathryn Exum, co-head of sovereign research at Gramercy.
The latest leg of the bonds’ rally began in September, when ships off the Venezuelan Caribbean coast were targeted by U.S. strikes. U.S. President Donald Trump later heightened his rhetoric…
