Goldman Faces Heat For Buying $2.8 Billion Worth of Venezuelan Bonds

Goldman Sachs buys $2.8 billion worth Venezuelan bonds

Goldman Sachs’ decision to buy $2.8 billion worth of bonds issued by Venezuela’s (EMB) oil company Petroleos de Venezuela SA (PDVSA) has sparked an uproar across the country. Goldman Sachs (GS) purchased these 2022 maturity bonds at a 70% discount paying $865 million for bonds worth $2.8 billion. As per Bloomberg data, Goldman Sachs was the seventh-largest holder of PDVSA bonds as of March 31.  Opposition forces led by Julios Borges, president of the National Assembly in Venezuela, have protested against this investment and accused Goldman Sachs of making a “quick buck off the suffering of the Venezuelan people.” “Venezuela’s National Assembly will convene today to launch an official investigation into this transaction to determine if any laws were broken and whether a future, democratic government of Venezuela should recognize or pay on this debt entered into against the interests of our people,” Borges, said Tuesday in a statement.

Goldman Sachs, however, defended the deal stating that it bought the bonds through brokers in the secondary market and several mutual funds and exchange traded funds were already invested in them. “Many investors make similar investments daily through mutual funds, index funds and ETFs which also hold PDVSA bonds,” the firm said.

Lawmakers have reached out to large Wall Street banks lobbying them to not support the country to monetize its gold reserves worth $7.7 billion. Further, Ricardo Hausmann, Harvard University economist and former planning minister in Venezuela, also called on JPMorgan Chase (JPM) to remove Venezuela from its bond indices in attempt to prevent investors tracking these indices from buying them.

Venezuela’s international reserves rebounded from near their lowest point since 2002 last week, gaining more than $700 million to $10.86 billion as of May 25.