Cost of underwriting Venezuela's debt rises after gubernatorial election
Insurance to protect the creditors of Venezuelan sovereign bonds increased on Monday after the favorable results for pro-government candidates in the election of Sunday, December 16
Credit default swaps (CDS) had dropped since President Chávez appointed a successor on December 8. The action raised the expectations about his stepping down after 14 years in office, Reuters cited.
Nevertheless, on Monday the CDS of the five-year debt bonds climbed 28 base points to 647 base points, according to Markit, a leading, global financial information services company.
Additionally, Venezuela's benchmark bond, maturing in 2007, shed 1.5 cents to USD 99.8.
President Nicolás Maduro is not only the heir to the throne, but also to an economic crisis which demanded urgent measures to rectify the course. The crisis showed up in two aspects: a 50% inflation estimate, and shortage of staples ranging between 70% and 98%. These issues might hit the President's poor popularity; considering his feeble electoral victory of 1% over his challenger.