Venezuela said Wednesday it would begin a process of restructuring its towering government debt, seeking to take advantage of warming relations with the U.S. to normalize ties with creditors and regain access to international financial markets.
With a public debt load estimated as high as $170 billion, Venezuela’s restructuring promises to be one of the largest and most complex efforts to renegotiate sovereign debt, economists say.
The country went into default in 2017. It is in hock to a sprawling array of creditors, including holders of bonds issued by the government and state oil company Petróleos de Venezuela SA, companies such as ConocoPhillips that seek billions of dollars for expropriated assets, and bilateral lenders like China.
“The current debt overhang constrains external financing, limits public investment capacity and prevents full re-engagement with the international financial system,” the office of Venezuela’s vice presidency for the economy said in a statement. “It needs to be substantially reduced for Venezuela to engage on a virtuous circle.”
Venezuela’s announcement comes as acting President Delcy Rodríguez works with the Trump administration to attract oil investors and reconnect the country to the global economy after years of U.S. sanctions and international isolation. Last week, Washington authorized Venezuela to hire advisers for a possible restructuring.
Venezuela didn’t provide a timetable for discussions or detail the terms it plans to propose to creditors. It added that it expects to present a macroeconomic framework and public debt sustainability analysis next month. Venezuela hired New York-based financial firm Centerview Partners as an adviser.
“This is not going to be immediate,” said Venezuelan economist and pollster Luis Vicente León. “There is a lot of cloth to cut through and many real obstacles ahead.”
But reaching a settlement with creditors is an important step to build credibility with markets and access to the international financing Venezuela needs to revive its lifeblood energy sector, he added.
The debt talks are taking off just as the U.S. is pushing oil and mining companies to flock to Venezuela to fulfill the U.S. plan to stabilize the economy. The latest development comes 18 weeks after the U.S. overthrew Rodríguez’s predecessor, the strongman Nicolás Maduro.
Write to Kejal Vyas at kejal.vyas@wsj.com
