OFAC issued a clarification for holders of the PDVSA 2020 bonds, opening the possibility of authorizing restructuring or refinancing agreements for these securities, without any connection to the Citgo guarantee.
The Office of Foreign Assets Control (OFAC) maintained the block on the possible sale of Venezuela’s oil subsidiary in the United States, Citgo, until December 18, leaving the auction ordered by a U.S. court in Delaware on hold.
As a result of this new extension, Venezuela’s creditors in expropriation cases and holders of PDVSA 2020 bonds, who are among the beneficiaries of the judicially approved auction, will have to continue waiting.
Meanwhile, representatives of the Venezuelan opposition, the government, and various creditors such as mining company Gold Reserve have filed appeals and motions before higher courts, including the U.S. Court of Appeals for the Third Circuit in Philadelphia, to halt or review the forced sale.
So far, OFAC has approved 28 extensions of the original license.
A light at the end of the tunnel
On the other hand, OFAC also published a clarification in its Q&A section that offers a light at the end of the tunnel for holders of PDVSA 2020 bonds, opening up the possibility of authorizing restructuring or refinancing agreements for these securities, unrelated to the Citgo guarantee.
The agency, which is part of the U.S. Department of the Treasury, could authorize specific licenses to enable renegotiation agreements for bondholders
“OFAC would guide the parties in applying for a specific license and would maintain a favorable licensing policy regarding these agreements,” OFAC said.