Ashmore Group analysts Jan Dehn and John Sfakianakis report that Venezuela is now unlikely to default on its public debt after the DR secured sovereign debt to buy back its debt at considerable savings, as commented by Dimitra DeFotis in a blog in Barrons. The DR used the proceeds from a recent US$2.5 billion bond issue to buy back more than US$4 billion in debt it owed to Venezuela. The DR took on bilateral debt at long term and exchanged it for sovereign debt. However, in the process, the country reduced its outstanding international debt by an estimated 3.3% of GDP. The interest costs for borrowing future debt are now expected to drop.
The deal, however, was timelier for Venezuela, which is affected by the significant drop in oil prices.
Dehn and Sfakianakis think Venezuela is now unlikely to default on its sovereign debt obligations. For Venezuela, the analysts say that the deal generated an inflow of US$1.9 billion, which caused foreign exchange reserves to rise from US$20.6 billion to US$22.4 billion last week. Venezuela could now attempt similar deals with Jamaica and Paraguay.
http://blogs.barrons.com/emergingmarketsdaily/2015/02/03/venezuela-unlikley-to-default-as-oil-rises-dominican-republic-saves-day/
http://presidencia.gob.do/noticias/como-y-porque-republica-dominicana-redujo-su-deuda-publica-petrolera