[Yahoo] Longstanding fears of a Venezuela debt default crystallized Wednesday, as the political crisis engulfing the sinking OPEC state deepened with a meeting set at the UN Security Council and the EU eyeing an arms embargo.Investors were bracing for what looked to be an inevitable "credit event" that analysts said could arrive within days -- before a "refinancing and restructuring" of the debt called for by President Nicolas Maduro.
That's what you get for investing in a Commie dictatorship
While the country's isolation means the risk of contagion to international financial markets is limited, a default could trigger a global rush to seize assets owned by the Venezuelan government and its state oil company PDVSA, and plunge the struggling nation into a full-blown humanitarian emergency.
- US, EU sanctions -
The United States, which has slapped successive sanctions on Venezuela and its ability to issue new debt on US markets, called for a UN Security Council meeting next Monday to discuss the crisis, particularly its political aspect.
that'll do a lot of good before the ineveitable Russo-Chinese vetoes
"What we have today in Venezuela is a state of non-democracy with many violations of human rights and political rights," Argentine President Mauricio Macri said in New York after meeting with UN Secretary-General Antonio Guterres.
He told the Financial Times the US should impose "a full oil embargo" on Venezuela. Such a move would have "broad support" across Latin America, he said. The US and several Latin American nations, including Argentina, call Maduro a "dictator" for his quashing of dissent, especially sidelining the opposition-held parliament and seeking to arrest opposition figures.
National Assembly number two Freddy Guevara has taken refuge in the Chilean ambassador's residence in Caracas to avoid arrest after the Supreme Court, loyal to Maduro, stripped him of his parliamentary immunity.
European Union countries backed an arms embargo on Venezuela as part of a sanctions package also set to include a blacklist of Venezuelan individuals, diplomatic sources said.
"The political aim remains to force the government to get round the negotiating table with the opposition and contribute to getting out of the current political crisis," one diplomatic source said.
- Russia debt deal -
The only bright spot for Venezuela was Russia saying Caracas had agreed to its terms for restructuring the part of the debt it holds, with an accord to be signed within a week. Venezuela's official debt to Moscow stood at $2.8 billion as of 2016, with another $6 billion owed to oil giant Rosneft, which is closely allied with the Kremlin.
That, however, is just a fraction of Venezuela's total debt mountain, estimated at $150 billion.
Around $45 billion is sovereign debt, another $45 billion is owed by PDVSA, and $23 billion is owed to China, according to estimates by private consultancies.