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Radio: Venezuela Drone Attack on President Maduro

With Russ Dallen, Kevin Freeman, Tony Badran and Rowan Scarborough

RUSS DALLEN, President & Editor in Chief at the Latin American Herald Tribune, Head of the international investment bank, Caracas Capital Markets, Served as President of Venezuela’s “The Daily Journal”:

  • Significance of assassination attempt on Maduro
  • Consequences of rapidly increasing inflation in Venezuela
  • Recent inauguration in Colombia

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Wall Street Journal: How Venezuela Became China’s Money Pit

At one point when prices were higher and its oil industry less decrepit, Venezuela was sending China 600,000 barrels a day, according to Russ Dallen, the chief executive of Caracas Capital Markets, who has done extensive work untangling Venezuela’s opaque finances. He estimated that has brought the balance down to about $20 to $23 billion, plus another $3 billion to $4 billion owed to Russian oil company Rosneft.

Secure Freedom Radio: Russ Dallen on Venezuela Coup Attempt, Vice President Pence & Mexico’s AMLO

With Russ Dallen, John Daniel Davidson, Benjamin Weingarten and David Goldman

June 28th, 2018

RUSS DALLEN, President & Editor in Chief at The Latin American Herald Tribune, Head of the international investment bank, Caracas Capital Markets, Served as President of Venezuela’s “The Daily Journal”:

  • What is Operation Constitution in Venezuela
  • VP Pence’s tour of South America
  • Election in Mexico this weekend

JOHN DANIEL DAVIDSON, Senior Correspondent at the Federalist:

  • The state of insecurity of America’s southern border
  • Effectiveness of a physical ‘wall’

BENJAMIN WEINGARTEN, Founder and CEO of ChangeUp Media LLC, His writing has appeared at City Journal and Conservative Review, 2015 Publius Fellow to the Claremont Institute:

  • Trump-Putin summit July 16th
  • Implications of Russia’s nuclear arsenal buildup
  • Kushner’s Israel-Palestine peace plan

DAVID GOLDMAN, Author of How Civilizations Die, Best known for his series of essays in the Asia Times under the pseudonym Spengler:

  • The turbulence of oil prices in the US
  • Social justice, Judaism and Israel

Financial Times: Venezuela – All Change, No Change

“These frenetic movements betray a clueless government in panic as oil production crashes below 1.4m barrels per day,” said Russ Dallen, head of locally based investment bank Caracas Capital.



Secure Freedom Radio: Russ Dallen on Venezuela & Colombia

With Amb. Hank Cooper, Dr. Mark Schneider, Russ Dallen and David Goldman

June 21st, 2018

AMB. HANK COOPER, Director of the Strategic Defensive Initiative Organization (SDIO) during the Bush Administration, Associate of the National Institute of Public Policy:

  • President Trump’s unveiling of ‘Space Force’ in US military
  • Why space assets are essential to our economy and national security

DR. MARK SCHNEIDER, Senior Analyst with the National Institute for Public Policy, Longtime career in the Office of the Secretary of Defense:

  • Is Russia preparing for war?
  • The state of US tactical nuclear weapons inventory

RUSS DALLEN, President & Editor in Chief at the Latin American Herald Tribune, Head of the international investment bank, Caracas Capital Markets, Served as President of Venezuela’s “The Daily Journal”:

  • Maduro’s charm offensive with foreign investors
  • Colombia’s recent election

DAVID GOLDMAN, Author of How Civilizations Die, best known for his series of essays in the Asia Times under the pseudonym Spengler:

  • Chinese official threatens financial warfare against the US
  • Significance of cutting off Chinese acquisition of US technologies

Wealth Manager: Venezuela – The EMD play that’s not for the faint hearted

It’s not every day that an intern risks bringing down an entire country’s economy.

But for Venezuela, which stopped paying bondholders for seven months without telling anyone, this is nearly what happened.

Despite this, a surprising number of emerging market debt (EMD) managers are still keen on the country’s prospects.

The government, led by controversial president Nicolas Maduro (pictured), has been accused of ‘hoodwinking’ investors after its central bank published data in April that accidentally revealed regular debt payments to foreign bondholders fell to the low tens of millions.

The country is still paying out on bonds from the state-owned oil company PDVSA and electricity firm Elecar, but data from Caracas Capital, which specialises in Latin American debt, showed $83 million (£63 million) was paid in October last year, compared to sovereign obligations of $465 million.

This went down to $23 million by December, compared to obligations of $242 million.

It is believed that the data, which showed the monthly spend figures in US dollars on foreign debt obligations, as opposed to the previous format of a ratio which revealed far less information, was posted by an intern at the central bank.

Russ Dallen, founder of Caracas Capital, originally broke the news of the ‘stealth default’ to his clients, and believes the outlook for short-term bondholders is rather bleak.

He said: ‘Venezuela has $65 billion outstanding for bonds and it’s a game of musical chairs; the first ones there are filing lawsuits, seizing whatever assets they can.

‘With PDVSA bonds you can go after assets, but with sovereign bonds it’s much harder to go after Venezuelan assets.’

Some investors, however, are playing the long game in Venezuela and see the opportunity to potentially strike gold further down the line in a country that, back in the 1970s, was AAA-rated by rating agency Moody’s.

The long game

One such investor is Citywire AA-rated Claudia Calich, manager of the M&G Emerging Markets Bond fund. She has 1.15% of her fund in Venezuelan bonds, particularly in sovereign and PDVSA bonds with 10 to 15-year maturities.

She said: ‘The valuations from a very long-term perspective look interesting. Some bonds there are trading at 23, 24, 25 cents to the dollar, and sovereign bonds are trading at 27-29 cents.

‘If you look at other countries that have restructured their debt over the last couple of decades in emerging markets, the money that creditors actually receive ranges from 30 cents to 70-80 cents on the dollar, so there are long-term recovery values there.’

Of course, any hope of a major debt restructuring in Venezuela, and actual economic reform, seemingly rests on a change of government.

To some, this would appear unlikely to happen in the foreseeable future, but Uday Patnaik, head of emerging market debt at Legal & General Investment Management (LGIM), believes the Maduro regime could fall by the end of this year, with a more market-friendly, pro-Western regime taking its place. He too holds Venezuelan sovereign bonds.

He said: ‘I’m very sceptical this regime will last. That is the goal of the US sanctions. There’s also a massive problem with the refugee crisis, with Venezuelans migrating to Colombia and other countries in the Americas.

‘They want this government to end as well, so the military would undoubtedly be involved in any regime change, and it’s in their interests too to gain FDI [foreign direct investment] and for the US sanctions to be removed.’

Patnaik is also upbeat on valuations in the event of a debt restructuring, with LGIM’s models showing restructuring values of 45-65 cents on the dollar for Venezuelan sovereign bonds.

He added: ‘The upside is tremendous, assuming we have a regime change. That’s the reason we have exposure. The big question is, am I right?

‘The downside is probably 18-20 cents on the dollar, unless Venezuela goes in the direction of Cuba or North Korea where it would go lower,
but I don’t see that happening. I believe the regime will end.’

Indeed, the expectation of regime change is something echoed by Colombia’s president, Juan Manuel Santos, who told a meeting of business leaders in Hungary last month he believes a regime change ‘will come very soon’, after which the Venezuelan economy will ‘take off very fast’.

Dallen, a specialist in Venezuelan debt, sees the sense in investors holding out, especially if a new regime can harvest the opportunities the country provides.

He said: ‘That’s the long-term play. It’s important to remember this is not a solvency crisis, it’s a liquidity crisis. Venezuela has the largest oil reserves in the world. They have trillions of dollars in the ground, but isn’t getting it out.

‘That’s the bet, that the regime changes and Venezuela eventually returns to the international capital markets to develop its vast resources, not just oil. It has the fourth largest gold reserves in the world but is not producing anything from gold right now. It also a lot of iron ore, copper, strategic metals, diamonds and emeralds.’

Caracas Capital in The Gartman Letter


Americas Quarterly: Russian Interests in Venezuela – A New Cold War?

Russ Dallen, Caracas Capital, May 14, 2018.

Caracas Capital in the Gartman Letter



ESTADÃO: Venezuela retira suas reservas no FMI e produz menos petróleo

A Venezuela sacou em abril US$ 475 milhões de sua reserva no Fundo Monetário Internacional (FMI). No início do ano, o país já havia retirado os últimos US$ 250 milhões de seus Direitos Especiais de Saque (SDR), conta na qual tinha US$ 3,6 bilhões em 2015. Caracas ainda possui US$ 362 milhões em sua reserva na instituição. O restante de sua cota é integrado por bolívares que não têm nenhum valor

O quase esgotamento dos recursos que o país poderia retirar do Fundo é um dos vários sinais que indicam um futuro de aperto financeiro cada vez maior. A Venezuela que Nicolás Maduro continuará a governar já enfrenta queda na produção de petróleo, cerco de credores externos e sanções crescentes dos EUA.

“A Venezuela emprestou bilhões do FMI e está deixando a organização com um monte de bolívares do jogo Banco Imobiliário, que não valem nada”, disse Russ Dallen, da consultoria Caracas Capital. Todos os saques realizados eram permitidos pelas regras da instituição. Os US$ 362 milhões restantes integram as reservas internacionais da Venezuela, cujo valor total está em menos de US$ 10 bilhões. No Brasil, elas são de US$ 382 bilhões.

A produção de petróleo na Venezuela chegou em abril a 1,436 milhão de barris/dia, mesmo patamar registrado em 1949. Mas desse total, apenas 152 mil barris/dia são exportados em troca de divisas, estima Dallen. O restante é usado para consumo doméstico, a preço irrisório, ou destinado ao pagamento de dívidas com China e Rússia e a programas de cooperação com Cuba e Nicarágua.

Quando Hugo Chávez foi eleito, em 1998, a Venezuela produzia 3,5 milhões de barris de petróleo ao dia.  Agora, o país com as maiores reservas de petróleo do mundo importa o produto, o que reduz o impacto positivo para o país da crescente alta no preço da commodity.

A situação é agravada pelo calote da Venezuela e por decisões judiciais que deram à ConocoPhillips o poder de arrestar carregamentos de petróleo em águas internacionais. Depois do sucesso da companhia americana em capturar cargas no início de maio, Caracas determinou a volta ao país de todas as embarcações que tivessem petróleo venezuelano. “Eles se impuseram um autobloqueio”, observou Dallen.

Na avaliação de Dallen, a capacidade de sobrevivência do regime dependerá em grande medida da disposição da Rússia de financiar Caracas. Depois de emprestar US$ 65 bilhões à Venezuela nos últimos anos, a China estaria mais relutante em entregar recursos adicionais a Maduro, afirmou.

“Eles estão desesperados e estão buscando dinheiro até embaixo do colchão”, afirmou Dallen.  Segundo ele, a maior parte da produção de petróleo do país não gera receita ou divisas. Do 1,436 milhão de barris/dia de abril, 491 mil foram destinados ao consumo doméstico, a preços irrisórios. A US$ 0,01(R$ 0,037) o litro, a Venezuela tem o combustível mais barato do mundo.

Outros 505 mil barris foram entregues à China, como pagamento de empréstimos feitos nos últimos anos em troca de petróleo futuro. O crédito, ressalta Dallen, já foi gasto há muito tempo. A Rússia ficou com 165 mil barris/dia, também como ressarcimento de financiamentos. Outros 123 mil barris/dia foram destinados a Cuba e Nicarágua, dentro de programas de cooperação com os países. Sobraram 152 mil barris/dia.,venezuela-retira-suas-reservas-no-fmi-e-produz-menos-petroleo,70002336184

Miami Herald: Maduro uses repression and military purge to stay in power in Venezuela

Facing an accelerating economic collapse and growing discontent in all sectors of the population, Maduro will have no choice but to speed up the process of installing a Cuba-like totalitarian system that eliminates direct elections, said Russ Dallen, managing partner of the Caracas Capital investment bank.

“As the country enters this new phase, we expect an increase in instability, vulnerability, cruelty and an inability to govern, while the Maduro regime tries to finish destroying what little is left of the country’s democratic institutions,” Dallen wrote in a bank report.

“To counter the increasing likelihood of domestic unrest, the regime will continue arresting more soldiers even as Maduro issues more calls for dialogue, for reconciliation and peace — and simultaneously tries to consolidate the regime’s controls,” Dallen added.

El Nuevo Herald: Sin pueblo y sin dinero, un acorralado Maduro recurre a la represión y purga militar para seguir en el poder

Bajo el actual escenario de acelerado colapso económico y creciente descontento dentro de todos los sectores de la población, Maduro no tendrá más alternativa que acelerar el proceso de instaurar un régimen castrista en el país, utilizando la cuestionada Asamblea Nacional Constituyente para formalizar el denominado estado comunal, políticas que incluyen la eliminación de la votación directa, advierte Russ Dallen, socio gerente del banco de inversión Caracas Capital.

“En la medida que el país entra en esta nueva fase, nosotros prevemos un incremento de la inestabilidad, vulnerabilidad, crueldad e ingobernabilidad del país, mientras el régimen de Maduro trata de terminar el proceso de destrucción de lo que queda de las instituciones democráticas del país”, dijo Dallen en un informe.

“Para contrarrestar las mayores probabilidades de agitación doméstica, el régimen seguirá arrestando a más soldados mientras Maduro hace llamados para emprender el diálogo, la reconciliación y la paz, y simultáneamente emprende esfuerzos por consolidar el control del régimen”, agregó.

Estos pasos ahora son apremiantes, particularmente ante el hecho de que Maduro no logró demostrarle al mundo que la Revolución que preside sigue contando con el respaldo del pueblo venezolano.

Secure Freedom Radio with Russ Dallen

RUSS DALLEN, President & Editor in Chief at the Latin American Herald Tribune, Head of the international investment bank, Caracas Capital Markets, Served as President of Venezuela’s “The Daily Journal”:

  • Implications of Venezuela’s scam elections
  • Is an intervention in Venezuela necessary?

Bloomberg TV: Venezuela’s Political and Financial Chaos Disrupts Oil Market

Beset by political and financial chaos at home, Venezuela’s PDVSA never took legal precautions common for distressed corporate debtors, including protecting cargoes from seizure. PDVSA also lacks the sovereign immunity of a national government that’s helped others slow-walk collections in the past. Conoco was able to move at light-speed to begin enforcing a $2 billion arbitration award it won last month by freezing PDVSA’s oil exports at key Caribbean harbors. Russ Dallen, Caracas Capital Markets managing partner, and Jason Bordoff, Columbia University SIPA’s Center on Global Energy Policy founding director, talk with Bloomberg’s Alix Steel about Venezuela.

Financial Times: Venezuela’s Collapsing Crude Exports Send Prices Soaring

And the Opec member’s exports are seen to be dropping sharply as troubles mount for PDVSA, with Russ Dallen of investment bank Caracas Capital saying that the company faces “an avalanche” of lawsuits over unpaid bonds.

Mr Dallen of Caracas Capital said that SNC and the other noteholders could even get ahead of ConocoPhillips in the queue to seize PDVSA assets. “SNC doesn’t have to register its claim in court, it can just go ahead and enforce,” he said.


The danger is that PDVSA may no longer be acting in a rational manner. Last month, two executives at US major Chevron, which has continued to operate in Venezuela, were arrested and charged with treason after reportedly refusing to sign over-priced supply contracts.

Until last year, says Mr Dallen, PDVSA had sought to keep its creditors engaged in helping to get its oil to market. But this changed in November with the appointment of Major General Manuel Quevedo as oil minister and head of PDVSA, who had no previous experience in the industry.

“Quevedo has declared war on everybody,” said Mr Dallen. “That’s just stupid. They’re your partners — you don’t lock people up for doing their job.”

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