Bloomberg

Veteran investor Arif Joshi traveled to Caracas this week to assess where Venezuela is headed after the end of a 13-year presidency that left it in default on its debt and isolated from the global economy. By Bloomberg After joining several dozen analysts and hedge fund investors in a round of meetings with interim president Delcy Rodríguez and other authorities, he returned to New York with the firm conviction that Venezuelan bonds are an excellent investment. "Venezuela is the biggest opportunity in emerging markets," said Joshi, portfolio manager at Bramshill Investments, which oversees more than $8 billion in investments. "Several positive catalysts still await us." The arrest in the United States of then-President Nicolás Maduro in early January spurred a strong rally in the bonds of Venezuela and its state-owned energy company, Petróleos de Venezuela SA, as investors bet it would pave the way for a restructuring plan for bonds worth approximately $100 billion. This translated into triple-digit returns for Venezuela's sovereign debt over the past year, and caused some of it to trade at more than 50 cents on the dollar. Many risks still exist. It is not clear exactly how Rodríguez, the former vice president, will stimulate an economy that has suffered a decade-long collapse, nor what her approach to the enormous public debt will be. Venezuela remains subject to US sanctions, which must be lifted before any debt restructuring plan can be implemented. But US President Donald Trump has praised Rodríguez, calling her an ally, and his administration has begun to ease some restrictions on the energy industry as he encourages oil companies to invest there. Joshi said he was surprised by the pace of some government reforms since Rodríguez took office, including a push to reform Venezuela's three-decade-old mining investment framework. The visit left him with an optimistic feeling about how much bondholders can recover. "The US intention is to continue lifting sanctions, as the Venezuelan government has done practically everything it has been asked to do," Joshi said. Joshi is no stranger to sovereign crises after working in emerging markets for more than two decades. He has previously invested in the debt of Argentina, a country with a history of defaults, and visited Ukraine last year as part of the first trip by foreign investors to Kiev since the Russian invasion. He previously spent 15 years in the asset management division of Lazard Inc. and is now helping to launch a hedge fund focused on emerging markets. "In Venezuela, there is a widespread consensus that stabilization and economic growth must occur before elections, which likely means elections at the end of 2027 or early 2028," Joshi stated. "Both President Rodríguez and the opposition have strong incentives to boost the economy."