Goldman under fire for buying Venezuela "hunger bonds"

Venezuela

Venezuela

The leader of the Venezuelan opposition accused Goldman Sachs Monday of financing President Nicolas Maduro's socialist regime, following a report that the investment bank had bought $2.8 billion in bonds from the almost bankrupt country.

Goldman Sachs defended its action, saying it bought the bonds - issued in 2014 by state-run oil company PDVSA - with the hope that life in Venezuela will improve.

Sixty-nine people have been killed in Venezuela since April 1 as result of numerous, violent protests held against the nation's leader Nicolas Maduro, head of the Venezuelan non-governmental organization, Foro Penal (Penal Forum), Alfredo Romero, said Tuesday, Sputnik reported.

One of the country's main opposition leaders said Goldman's deal will "strengthen the brutal repression unleashed against the hundreds of thousands of Venezuelans peacefully protesting".

Goldman Sachs's asset-management division paid about $865 million for the bonds, about 31 cents on the dollar.

"We recognize that the situation is complex and evolving and that Venezuela is in crisis", the bank said in a statement quoted by Reuters.

Borges said the National Assembly will launch an investigation into the matter.

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Goldman's position is somewhat puzzling as this particular bond will mature in five years, an unusually long exposure for typical emerging market money managers. Venezuela's worldwide reserves rose by $749 million on Thursday and Friday, reaching around $10.86 billion, according to the central bank.

In a statement, Goldman confirmed the purchase but not how much it paid.

Crisis-hit Venezuela devalued its currency by 64 percent in a dollar auction that aimed to stabilize its foreign exchange market, officials said Wednesday. "If financial resources are found - the companies will deliver", he said. If they don't object and make a decent profit, Goldman Sachs will continue to thrive. About 75 percent of Venezuelans lost an average of 19 pounds past year, according to the National Poll of Living Conditions.

Maduro's adversaries have for two months been blocking highways and setting up barricades in protests demanding he call early elections and address an increasingly severe economic crisis that has left millions struggling to get enough to eat.

The opposition-led National Assembly later on Tuesday voted to ask the U.S. Congress to investigate the deal, which they called immoral, opaque, and hypocritical given the socialist government's anti-Wall Street rhetoric.

If the bonds do not default, Goldman Sachs stands to reap a whopping 40% annual yield, which could quiet its investors. But it's hard to imagine an insulin-deprived Venezuelan diabetic receiving these words kindly as his government scrounges for change under the national sofa-cushion in order to send a novelty-sized check to 200 West St.

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