(Bloomberg) — The Venezuelan government has hired Rothschild & Co. as a financial adviser to provide insight into its foreign debt obligations, according to people familiar with the matter.
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Rothschild is working to determine what the administration owes and to whom, said the people who requested anonymity to discuss a contract that has not been made public. Debt mapping is normally a preliminary step taken by a government before preparing to begin restructuring.
Representatives for Paris-based Rothschild declined to comment. A press official for Venezuela’s Finance Ministry did not respond to messages seeking comment.
Venezuela owes about $154 billion to foreign lenders — according to an estimate by economist Francisco Rodriguez, a professor at the University of Denver — including global bonds issued by the government and the state oil company, which are in default for more than six years. It accrues interest on these bonds and court judgments for unpaid business loans.
Sovereign bonds trade at around 20 cents on the dollar, while defaulted notes issued by Petroleos de Venezuela SA trade at around 11 cents, according to indicative prices compiled by Bloomberg. Debt has risen since JPMorgan Chase & Co. outlined a plan in February to reweight securities in widely followed emerging-market debt indexes.
REDD Intelligence first reported that Venezuela had retained Rothschild as an advisor. The hire comes amid a recent push by President Nicolas Maduro’s administration to reengage with global markets, multilateral institutions and rating companies after years of international isolation. Over the years, the president has signaled a willingness to work with creditors, although those talks never progressed.
Washington does not recognize Maduro and sanctions prohibit the government from selling debt on American markets. The sanctions would have to be modified before debt restructuring could be carried out.
Relations between the two countries deteriorated last week when the United States reimposed sanctions on the oil and gas industries, citing Maduro’s failure to deliver on promises to hold fair elections later this year. Venezuela, in turn, said Washington had violated a political agreement signed last year in Doha.
Read more: US to reinstate sanctions on Venezuela, says Maduro broke deal
The country is expected to vote on July 28 in an election that pits Maduro against an opposition candidate, likely Ambassador Edmundo Gonzalez.
(Updates with REDD Intelligence report in sixth paragraph.)
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