PDVSA’s Citgo is the next battleground between Maduro and Guaido PDVSA’s Citgo is the next battleground between Maduro and Guaido PDVSA’s Citgo is the next battleground between Maduro and Guaido

PDVSA’s Citgo is the next battleground between Maduro and Guaido

Christopher Dembik

Head of Macroeconomic Research

Summary:  An overview of the current macroeconomic situation in Venezuela and the risk of PDVSA's bond default.

Six months ago, I wrote an analysis focusing on how to rebuild Venezuela’s economy.

It is time to look at the evolution of the situation.

The domestic transition is stopped for now: The combination of US sanctions, massive demonstrations and blackouts in the first part of the year has not managed to put an end to the Chavist experiment. The inability of the opposition leader Juan Guaido to win support from armed forces and the failed popular uprising have seriously undermined its credibility. His political capital is decreasing fast as he is unable to change the lives of Venezuelans. He still has the political and financial support of the United States, but many Latin American countries seem to be gradually moving away. A few days ago, the Latin American development bank CAF denied evaluating a loan of about several hundred million dollars to Venezuela, contradicting earliest comments made by Juan Guaido. It reflects wavering support from the capitals of the region.

The economic situation has temporarily stabilized: According to the National Assembly, inflation fell back to 23% m/m in September from 65% in August. Despite the decrease, the country is not following the road of successful exit from hyperinflation. It will certainly remain an issue in the long run considering the Maduro government, that is still in charge of the central bank, is reluctant to implement a monetary reform.

The bolivar has stabilized but trust in the currency is destroyed: Based on DolarToday data related to the evolution of the bolivar on the black market, the exchange rate has stabilized over the past months. However, the process of dollarization of the economy seems unavoidable. More and more consumer goods are directly paid in USD thanks to the remittances that families receive from abroad, and some are even able to run their own small business. 

The oil industry is literally falling apart: There is little hope for the oil industry in the medium term as underinvestment, US sanctions and less support from China and Russia are undermining the national oil company PDVSA’s refining capacity. Based on the available data, PDVSA’s refineries only operate at 10% of their capacity and crude oil production has fallen to 1 million barrels per day, which is almost 40% lower than the production in 2018.  

The next battleground is Citgo: PDVSA’s subsidiary CITGO is currently at the center of the legal battle in US courts between the Maduro government and the opposition leader Juan Guaido. This is the most valuable Venezuelan asset abroad _ valued at around $8 billion _ that will be at the core of the debt renegotiation process with creditors. 

As the debt belongs to various parties, it is rather difficult to precisely estimate it. Based on our estimates, the country’s outstanding debt is around $140-150 billion. We consider that roughly $60 billion are part of loan-for-oils deals with Russia and China, around $65 billion is due to international bondholders and the rest is related to arbitration awards granted to foreign companies following nationalization.

Over the past years, the Maduro government has refinanced PDVSA by giving CITGO’s shares as a collateral, without the authorization of the National Assembly. CITGO’s shares also served as a collateral for a multibillion dollars loan granted by Russia’s Rosneft. Until now, the opposition leader Juan Guaido has always said he will honor payments but, considering the unsustainable level of debt, it is getting increasingly likely that he will not necessarily honor these deals or find loophole, which starts to scare off creditors. In our view, it is becoming clear that Guaido’s top priority is not to repay “unauthorized” debt. Thus, the risk is elevated that PDVSA will default in late October on a $913 million bond backed by CITGO’s shares (called PDVSA 2020), which may further complicate the legal mess around Venezuela’s debt.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

40 Bank Street, 26th floor
E14 5DA
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992