When Goldman Sachs essentially sent the communist regime a US$2.8 billion lifeline, I said,
As long as someone is willing to be part of the debt pyramid scheme, it’ll continue. Let’s hope it’s not the U.S.
Sure enough,
Japanese investment bank Nomura admits part in Goldman Venezuelan bond deal
A Japanese investment bank has admitted it was part of a controversial deal with Goldman Sachs to buy Venezuelan government bonds.Nomura Securities said it also bought about $100m worth of the bonds last week, according to Reuters reports.
. . .
Reuters reported that Nomura said its purchase had cost $30m.
Goldman said its asset-management arm acquired the bonds “on the secondary market from a broker and did not interact with the Venezuelan government”.
. . .
Even at 31 cents on the dollar, Nomura is taking a risk buying the bonds. In November, its own head of Latin America fixed-income strategy, Siobhan Mordan, warned investors: “The bottom line for bondholders is not if, but when is the timing for debt default?”
When? When the debt pyramid collapses, that’s when.
Ellen Wald posts,
Goldman Sachs, apparently, was unaware that: 1) Historically, when a political party is forced out through revolution, coup, or other extralegal means, the new government does not always pay the debts incurred by the old one, and 2) It is strategically beneficial to the opposition party in Venezuela to deny payment to Goldman Sachs.
Wald assumes the current regime can be ousted, Maduro or no Maduro. For the time being, that’s unlikely.
I hope I’m wrong.
UPDATE
About the pyramid,
WSJ:
Nomura was approached by the same intermediary, the London subsidiary of a small broker, Dinosaur Merchant Bank Ltd., some of the people said.
Goldman bought the bonds for an emerging-market fund it manages on behalf of outside investors. Nomura bought the bonds through its broker-dealer, which will seek to sell them to clients at a higher price in the coming weeks, the people said.
Buyer beware.
UPDATE, Friday June 2,
Goldman’s Venezuela Bond Trade Wasn’t Reviewed by Top Executives
