The pitfalls of sell-side research in the Trump era: Venezuela edition
Financial Times••business
Key Points:
- Barclays downgraded Venezuelan bonds from market weight to underweight, citing skepticism about the likelihood of a political transition without more forceful U.S. action against Nicolás Maduro.
- Despite initial doubts, the U.S. conducted a successful mission to extract and apprehend Maduro shortly after the downgrade, prompting Barclays to quickly upgrade Venezuelan bonds back to market weight.
- Venezuelan bonds surged 25% following the news of Maduro's capture, reflecting market optimism despite the country's significant debt burden exceeding 119% of GDP.
- Barclays estimates a feasible recovery value of Venezuelan bonds at 35-45 cents on the dollar but warns that restructuring will likely take considerable time, and current bond prices may already be overvalued.
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