Venezuela’s Debt Crisis Takes Center Stage Following Maduro’s Ouster

The recent toppling of Nicolas Maduro has brought Venezuela’s debt crisis, one of the largest unresolved sovereign defaults globally, into sharp focus.

After years of economic turmoil and U.S. sanctions that cut the country off from international capital markets, Venezuela defaulted in late 2017. This was marked by missed payments on international bonds issued by the government and the state oil company, Petroleos de Venezuela (PDVSA).

Since that time, accumulated interest and legal claims related to past expropriations have compounded unpaid principal, inflating total external liabilities far beyond the original bond values.

Venezuelan leader Nicolas Maduro may be counted on to help Russia bypass U.S. sanctions. (Matias Delacroix/Getty Images)

Since U.S. President Donald Trump took office in January 2025, Venezuela’s distressed debt has seen a rally as speculators anticipate potential political changes.

HOW MUCH DOES VENEZUELA OWE?

Analysts estimate that Venezuela has approximately $60 billion in defaulted bonds outstanding. However, when considering total external debt—including PDVSA obligations, bilateral loans, and arbitration awards—the figure rises to around $150-$170 billion, depending on how accrued interest and court judgments are factored in.

The International Monetary Fund (IMF) estimates Venezuela’s nominal GDP at about $82.8 billion for 2025, resulting in a staggering debt-to-GDP ratio of between 180%-200%.

People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela Nov. 16, 2024. (Reuters/File Photo)

A PDVSA bond originally set to mature in 2020 was secured by a majority stake in Citgo, a U.S.-based refiner ultimately owned by PDVSA. This asset is now central to court-supervised efforts by creditors seeking to recover value.

WHO HOLDS WHAT?

Years of sanctions, including a ban on trading Venezuela’s debt, have complicated ownership tracking.

The largest share of commercial creditors likely consists of international bondholders, including distressed-debt investors, often referred to as vulture funds. Among these creditors are companies awarded compensation through international arbitration after Caracas expropriated their assets. U.S. courts have upheld multi-billion-dollar awards to firms like ConocoPhillips and Crystallex, transforming these claims into debt obligations that allow creditors to pursue Venezuelan assets.

A growing pool of court-recognized claimants is competing for recovery from Citgo’s parent company through U.S. legal proceedings. A Delaware court has registered approximately $19 billion in claims for the auction of PDV Holding, Citgo’s parent, which far exceeds the estimated value of Citgo’s total assets. PDV Holding is a wholly-owned subsidiary of PDVSA.

Additionally, Caracas has bilateral creditors, primarily China and Russia, which extended loans to both Maduro and his predecessor, Hugo Chavez.

Hugo Chavez, then-president of Venezuela, gestures during his “Alo Presidente” program in front of an image of Che Guevara on Oct. 14, 2007, in Santa Clara, Cuba. (Sven Creutzmann/Mambo photo/Getty Images)

Exact figures are challenging to verify, as Venezuela has not published comprehensive debt statistics in years.

A DISTANT RESTRUCTURING?

Given the multitude of claims, legal proceedings, and political uncertainty, a formal restructuring is anticipated to be complex and protracted.

A sovereign debt workout could be anchored by an IMF program that sets fiscal targets and debt sustainability assumptions. However, Venezuela has not had an IMF annual consultation in nearly two decades and remains locked out of the lender’s financing.

U.S. sanctions further complicate matters. Since 2017, restrictions imposed by both Republican and Democratic administrations have significantly limited Venezuela’s ability to issue or restructure debt without explicit licenses from the U.S. Treasury.

The future of U.S. sanctions remains uncertain. For now, President Trump has stated that the U.S. will “run” the oil-producing nation.

WHAT ARE RECOVERY VALUES?

Bonds have returned approximately 95% at the index level in 2025, with many currently trading between 27-32 cents on the dollar, according to MarketAxess data.

Citigroup analysts estimated in November that a principal haircut of at least 50% would be necessary to restore debt sustainability and meet potential IMF conditions. Under Citi’s base case, Venezuela could propose a 20-year bond with a coupon of around 4.4%, alongside a 10-year zero-coupon note to compensate for past-due interest. Using an exit yield of 11%, Citi estimates the net present value of the package in the mid-40s cents on the dollar, with recoveries potentially rising into the high-40s if Venezuela were to offer additional contingent instruments such as oil-linked warrants.

A motorcycle rider passes in front of an oil-themed mural in Caracas, Venezuela. (Javier Campos/NurPhoto/Getty Images)

Other investors have suggested a broader range of recovery values. Aberdeen Investments indicated in September that it initially expected recoveries of around 25 cents on the dollar for Venezuelan bonds. However, improved political and sanctions scenarios could elevate recoveries into the low-to-mid-30s, depending on the structure of any deal and the use of oil-linked or GDP-style instruments.

WHAT IS VENEZUELA’S ECONOMIC SITUATION?

Recovery assumptions are set against a grim backdrop. Venezuela’s economy has contracted dramatically since 2013, with oil production plummeting, inflation soaring, and poverty escalating. Although output has stabilized somewhat, lower global oil prices and discounts on Venezuela’s crude limit revenue gains, leaving little room to service debt without significant restructuring. The recent U.S. blockade of sanctioned oil tankers has further worsened the situation.

Trump mentioned that American oil companies are prepared to tackle the challenging task of entering Venezuela and investing to restore production, but specifics and timelines remain unclear. Currently, Chevron is the only major American company operating in Venezuela’s oil fields.

The recent toppling of Nicolas Maduro has brought Venezuela’s debt crisis, one of the largest unresolved sovereign defaults globally, into sharp focus.

After years of economic turmoil and U.S. sanctions that cut the country off from international capital markets, Venezuela defaulted in late 2017. This was marked by missed payments on international bonds issued by the government and the state oil company, Petroleos de Venezuela (PDVSA).

Since that time, accumulated interest and legal claims related to past expropriations have compounded unpaid principal, inflating total external liabilities far beyond the original bond values.

Venezuelan leader Nicolas Maduro may be counted on to help Russia bypass U.S. sanctions. (Matias Delacroix/Getty Images)

Since U.S. President Donald Trump took office in January 2025, Venezuela’s distressed debt has seen a rally as speculators anticipate potential political changes.

HOW MUCH DOES VENEZUELA OWE?

Analysts estimate that Venezuela has approximately $60 billion in defaulted bonds outstanding. However, when considering total external debt—including PDVSA obligations, bilateral loans, and arbitration awards—the figure rises to around $150-$170 billion, depending on how accrued interest and court judgments are factored in.

The International Monetary Fund (IMF) estimates Venezuela’s nominal GDP at about $82.8 billion for 2025, resulting in a staggering debt-to-GDP ratio of between 180%-200%.

People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela Nov. 16, 2024. (Reuters/File Photo)

A PDVSA bond originally set to mature in 2020 was secured by a majority stake in Citgo, a U.S.-based refiner ultimately owned by PDVSA. This asset is now central to court-supervised efforts by creditors seeking to recover value.

WHO HOLDS WHAT?

Years of sanctions, including a ban on trading Venezuela’s debt, have complicated ownership tracking.

The largest share of commercial creditors likely consists of international bondholders, including distressed-debt investors, often referred to as vulture funds. Among these creditors are companies awarded compensation through international arbitration after Caracas expropriated their assets. U.S. courts have upheld multi-billion-dollar awards to firms like ConocoPhillips and Crystallex, transforming these claims into debt obligations that allow creditors to pursue Venezuelan assets.

A growing pool of court-recognized claimants is competing for recovery from Citgo’s parent company through U.S. legal proceedings. A Delaware court has registered approximately $19 billion in claims for the auction of PDV Holding, Citgo’s parent, which far exceeds the estimated value of Citgo’s total assets. PDV Holding is a wholly-owned subsidiary of PDVSA.

Additionally, Caracas has bilateral creditors, primarily China and Russia, which extended loans to both Maduro and his predecessor, Hugo Chavez.

Hugo Chavez, then-president of Venezuela, gestures during his “Alo Presidente” program in front of an image of Che Guevara on Oct. 14, 2007, in Santa Clara, Cuba. (Sven Creutzmann/Mambo photo/Getty Images)

Exact figures are challenging to verify, as Venezuela has not published comprehensive debt statistics in years.

A DISTANT RESTRUCTURING?

Given the multitude of claims, legal proceedings, and political uncertainty, a formal restructuring is anticipated to be complex and protracted.

A sovereign debt workout could be anchored by an IMF program that sets fiscal targets and debt sustainability assumptions. However, Venezuela has not had an IMF annual consultation in nearly two decades and remains locked out of the lender’s financing.

U.S. sanctions further complicate matters. Since 2017, restrictions imposed by both Republican and Democratic administrations have significantly limited Venezuela’s ability to issue or restructure debt without explicit licenses from the U.S. Treasury.

The future of U.S. sanctions remains uncertain. For now, President Trump has stated that the U.S. will “run” the oil-producing nation.

WHAT ARE RECOVERY VALUES?

Bonds have returned approximately 95% at the index level in 2025, with many currently trading between 27-32 cents on the dollar, according to MarketAxess data.

Citigroup analysts estimated in November that a principal haircut of at least 50% would be necessary to restore debt sustainability and meet potential IMF conditions. Under Citi’s base case, Venezuela could propose a 20-year bond with a coupon of around 4.4%, alongside a 10-year zero-coupon note to compensate for past-due interest. Using an exit yield of 11%, Citi estimates the net present value of the package in the mid-40s cents on the dollar, with recoveries potentially rising into the high-40s if Venezuela were to offer additional contingent instruments such as oil-linked warrants.

A motorcycle rider passes in front of an oil-themed mural in Caracas, Venezuela. (Javier Campos/NurPhoto/Getty Images)

Other investors have suggested a broader range of recovery values. Aberdeen Investments indicated in September that it initially expected recoveries of around 25 cents on the dollar for Venezuelan bonds. However, improved political and sanctions scenarios could elevate recoveries into the low-to-mid-30s, depending on the structure of any deal and the use of oil-linked or GDP-style instruments.

WHAT IS VENEZUELA’S ECONOMIC SITUATION?

Recovery assumptions are set against a grim backdrop. Venezuela’s economy has contracted dramatically since 2013, with oil production plummeting, inflation soaring, and poverty escalating. Although output has stabilized somewhat, lower global oil prices and discounts on Venezuela’s crude limit revenue gains, leaving little room to service debt without significant restructuring. The recent U.S. blockade of sanctioned oil tankers has further worsened the situation.

Trump mentioned that American oil companies are prepared to tackle the challenging task of entering Venezuela and investing to restore production, but specifics and timelines remain unclear. Currently, Chevron is the only major American company operating in Venezuela’s oil fields.