venezuela sells petrocaribe DR debt

[bronzeallspice]

First of all a private company bought the debt. Not the US Gov't. More than likely the debt can be used in a way to get certain doors open that were closed to them before. A company like Goldman Sachs will not get into any business situation without a clear benefit. So ex-pats need not prepare or worry about a thing.

An American multinational investment banking firm that engages in global investment banking.

So what can happen if the DR doesn't or can't pay its debt? Of course the banking firm will not
accept beans. Hoping the DR has a plan or they will have the DR by the balls.

Like PlayaCaribe said, or implode.

 

[bronzeallspice]

Panic!!!!!

The US hasn't bought the DR.

It shows how little you know. Most countries are so indebted to the US (through loans) some
aren't able to pay the interest, that the US "owns" them.

 

[bronzeallspice]

It shows how little you know. Most countries are so indebted to the US (through loans) some
aren't able to pay the interest, that the US "owns" them.

Your problem Mauricio, is that you do not want to hear anything negative because you do not want to
face the fact that the DR will not always be a safe haven. Understand that you made a third world a
home and that if things are not going well in first world countries, much less in a third world.

Paradise will not last forever. What you need to do is accept it and plan in the event that things start to
take a turn for the worst.

I am talking about everyone not just you, me included.

 

[Kipling333]

bronzzeallspice You are so far far off course.. The overwelming problem that the USA has is that owes trillions more than is owned to it .. It is the foreign debt of the USA that will take forever to pay off . Most countries may have loans which have been brokered with USA companies as well as world wide countries and of course the USA gives foreign aid but the USA has had to borrow squillions to pay for wars and badly managed economies.

 

[barker1964]

An American multinational investment banking firm that engages in global investment banking.

So what can happen if the DR doesn't or can't pay its debt? Of course the banking firm will not
accept beans. Hoping the DR has a plan or they will have the DR by the balls.



Like PlayaCaribe said, or implode.

They don't want to take over the country. More than likely it will be a land deal and resell said land to developers. I bet they purchased the debt for pennies on the dollar.

 

[bronzeallspice]

Do you seriously think that if the US which is in debt, a first world country which other countries
are depended upon falters that third world countries will be able to stay afloat? Please tell me you
are joking.

I will not continue to debate this because it will be useless. But like I always say, time will tell.

@ Kipling333

 

[Kipling333]

playa caribe you answered my question almost yourself ...the issues that may come before the court are attempted variations in the contract where both parties are not in agreement You mention that the court would be one of competent jurisdiction ...but in fact most contract court matters are decided in a a court and in a country nominated in the contract .
The silly clause I was referring to was not, in fact any aceleration clause . The silly clause I am hoping is not there is that Venezuela or who is standing in its shoes can not give notice of a variation in the terms or method payment that the DR can not unreasonably refuse .. I read the contract more than 5 years ago but now I cannot find it on line ...I wonder if GS will also be interested in the contracts of other countries .

 

[barker1964]

playa caribe you answered my question almost yourself ...the issues that may come before the court are attempted variations in the contract where both parties are not in agreement You mention that the court would be one of competent jurisdiction ...but in fact most contract court matters are decided in a a court and in a country nominated in the contract .
The silly clause I was referring to was not, in fact any aceleration clause . The silly clause I am hoping is not there is that Venezuela or who is standing in its shoes can not give notice of a variation in the terms or method payment that the DR can not unreasonably refuse .. I read the contract more than 5 years ago but now I cannot find it on line ...I wonder if GS will also be interested in the contracts of other countries .

Short answer .....Yes. Any business model is to expand in all directions. BTW they have holdings in other countries. DR is not the first. And low and behold they did not take over any governments. Below is a list of just some of their holdings.

http://www.goldmansachs.com/disclosures/gsgukl-country-by-country-reporting.pdf

 

[playacaribe2]

You mention that the court would be one of competent jurisdiction ...but in fact most contract court matters are decided in a a court and in a country nominated in the contract .

Ok. The court mentioned, if one was in the contract, IS presumably one chosen by the parties with jurisdiction. Many times the court chosen is neutral, like the International Court of Settlements and Disputes attached to the World Bank.

The silly clause I was referring to was not, in fact any aceleration clause . The silly clause I am hoping is not there is that Venezuela or who is standing in its shoes can not give notice of a variation in the terms or method payment that the DR can not unreasonably refuse .. I read the contract more than 5 years ago but now I cannot find it on line ...I wonder if GS will also be interested in the contracts of other countries .

Acceleration clauses are standard "boilerplate" as to what happens when one party defaults.

The terms are the terms. Venezuela, by its terms, could accept food/goods in lieu of payment, but was not obligated. I would be willing to wager GS will NOT accept food/goods....as is their option.

Further, quoting the Economist October 4th edition:

"Each PetroCaribe member has a separate energy-co-operation agreement, but the terms are broadly similar. The agreements can be cancelled or modified with just 30 days’ notice, cutting off the flow of new financing and forcing countries to pay market rates."

GS did reportedly try and do a deal with Venezuela to loan money against their gold reserves...same thing for Greece. These are not unsophisticated players in the world debt markets.

Respectfully,
Playacaribe2

 

[ltsnyder]

The thing to remember, Goldman Sachs does not Speculate, it does not invest

All evidence is that Goldman Sachs at the very least, is capable of disaster capitalism.
Too benefit off a disaster you really need the inside scoop on when it will happen.

Here are just two examples.

In the default of Greece, everyone "thought" they knew the debit load the nation was carrying.
Only Goldman Sachs had the inside scoop. They worked a complex deal involving capital to Greece in excahnge for a fixed currency exchange rate. This meant that all the investors that got stuck with junk bonds, looked at the books, and the books looked good. But they were not, and GS had to know that.

How Goldman Sachs Helped Greece Hide Its Debt & Made 2.8 Billion € Disappear
How Goldman Sachs Helped Greece Hide Its Debt & Made 2.8 Billion

You might think that was one case, but evidence they are doing the same in Spain now....

Inside the New York Fed: Secret Recordings and a Culture Clash ( Goldman deal to hide Spainish bank debit)
Inside the New York Fed: Secret Recordings and a Culture Clash - ProPublica

If Goldman bought the DR debit, they might be looking for purchases in a fire sale (so to speak).
If you take anything away from this message, internalize this statement, it will help you figure out what might happen.

Goldman Sachs does not gamble, they only do sure things.
DR like other nations are dependent on the world bank, the banking system always requires that all debits be paid in full. You'd be surprised how much capital can be squeezed out of a poor nation. Environmental De-regulation, mining interests, maybe shale of methyl-hydrates off the shelf, there is always something.

I was in Tanzania a year ago (for a work project) , the only Americans or Brits on the plane flight there were off shore rig frackers. I did not need to know who they were or think about it, I'd just start up a conversation, and they would tell me yes. But ask your self this, does the average Tanzanian know there is fracking off the coast, can you google it?

What ever happens in DR, I fear it will be metaphorically best called "Capitalism on Steroids".
http://worldoceanreview.com/en/files/2010/10/k7_wk_methanhydrate_vorkommen_e_en.jpg

 

[Criss Colon]

Then, CHINA owns the US!!!!!!!!
I have been getting "Screwed" in the DR since 1986, AND I LOVE IT!!!!
I see no reason why Americans living in the DR will have anything to worry about just because Goldman Sacks owns 4 billion dollars in Venezuelan debt????????
CCCCCCCCCCCCCCCC

 

[AlterEgo]

Then, CHINA owns the US!!!!!!!!
I have been getting "Screwed" in the DR since 1986, AND I LOVE IT!!!!
I see no reason why Americans living in the DR will have anything to worry about just because Goldman Sacks owns 4 billion dollars in Venezuelan debt????????
CCCCCCCCCCCCCCCC

I thought you were going to say you saw 50:1 pesos/dollar in your crystal ball!

 

[RonS]

As has been previously posted, GS is not going to take produce in lieu of currency as payment on the interest on the debt. That will definitely have an effect on the economy. But this undercurrent on the forum of some kind of doomsday scenario is really exaggerated. As a regular visitor from the US, 50-1 would be nice, but I doubt seriously that's going to happen as long as the PLD remains in power.

 

[playacaribe2]

The long and short of this whole thread is that: 1) Loans are bought and sold for gains and losses all over the world, every day of the week and every week of the year.

True...and further adding that GS is not likely to hold that DR debt to maturity....but rather package and sell it off in traunches.

2) The terms of the loan are exactly the same as when signed by the initiating parties. My mortgage on my home in the States was bought and sold FOUR times during the 15 years I had the loan and the terms NEVER changed and the interest rate remained the same.

Fixed rate commercial and/or sovereign debt loans are unheard of.

Some of the posters on here are "chicken littles" and fear every change that occurs in the World and how it may effect them here in the D.R. Venezuela is still in deep sh#t and will remain so until the regime changes and the economic basis there changes.

Perhaps. But being prepared never goes out of style.

Venezuela is, and has been, in deep stuff for some time now. This deal should be the canary in the coal mine as to the near term fate of the Venezuelan economy.

As to the DR, this will force the DR to pay without goods and with dollars. That means, coupled with the debt appetite the DR has been on in recent years, they may have to more rapidly devalue the currency (to obtain those dollars)....so CC's wish for 50:1 just got a little closer.

A little more piling on of debt in the DR, coupled with interest rate rises in the US, could make 50:1 a 2015 reality.


Respectfully,
Playacaribe2

 

[Fernandez]

GSachs acts as financial intermediary in transactions such as these. Rarely would they carry this asset on their balance sheet.
The RAROC (risk adjusted return on capital) factor on this asset would require additional reserve balances. I would argue that a buyer has already been lined up for the paper- at a spread. Wouldn't surprise me if they turn around and sell it to the DR "indirectly" in a debt "financed" long term deal that ends up sweet for both the DR and GSachs.

 

[the gorgon]

An absolute coup de tat for GS.

For Venezuela....economic breathing room for a few more months...but the haircut they took on the debt is unprecedented.

For the DR.....as pointed out above...no more beans, goods, etc., as payment.....and the payments will need to be timely...or risk penalties, default etc.


Respectfully,
Playacaribe2

did they say what the terms of the sale were? what did GS pony up to take over the debt?

 

[the gorgon]

True...and further adding that GS is not likely to hold that DR debt to maturity....but rather package and sell it off in traunches.



Fixed rate commercial and/or sovereign debt loans are unheard of.



Perhaps. But being prepared never goes out of style.

Venezuela is, and has been, in deep stuff for some time now. This deal should be the canary in the coal mine as to the near term fate of the Venezuelan economy.

As to the DR, this will force the DR to pay without goods and with dollars. That means, coupled with the debt appetite the DR has been on in recent years, they may have to more rapidly devalue the currency (to obtain those dollars)....so CC's wish for 50:1 just got a little closer.

A little more piling on of debt in the DR, coupled with interest rate rises in the US, could make 50:1 a 2015 reality.


Respectfully,
Playacaribe2

you confused me there, playacaribe. i always thought that when you have large outstanding dollar debts the way to pay them off was by revaluing your currency, so that it takes less of your money to buy dollars.

 

[the gorgon]

GSachs acts as financial intermediary in transactions such as these. Rarely would they carry this asset on their balance sheet.
The RAROC (risk adjusted return on capital) factor on this asset would require additional reserve balances. I would argue that a buyer has already been lined up for the paper- at a spread. Wouldn't surprise me if they turn around and sell it to the DR "indirectly" in a debt "financed" long term deal that ends up sweet for both the DR and GSachs.

since we are all speculating here, this is mine;

i think that GS is really a debt collections agency, in this case. i have read it several times that the DR is yet to pay off a dollar of the PetroCaribe debt. the only shipment of beans that i know off was rejected by Venezuela. i think that Venezuela was beginning to realize that this could end up as a bad debt, and, rather than write it off they decided to take what they could get. that is exactly what businesses the world over do. if a guy owes them 100 dollars, and they know they are going to get stiffed, they sell to a third party collections agency for whatever they can get, and leave the other guy with the problem of collecting.

 

[barker1964]

4 Billion debt and they paid 41% of the debt to take it over a 59% loss......LOL

http://www.zerohedge.com/news/2014-12-02/how-goldman-sachs-became-broke-venezuelas-loan-shark

 

[chic]

is the oil/deal$ still flowing? who does d.r. pay now? only the debt was purchased....is there new debt ? monthly etc?