Venezuela’s astoundingly messy debts are about to get messier

The government owes at least $95bn, or 115% of GDP, to three groups of creditors, according to the most recent reliable figures, last updated in 2024.

The toppling of a head of state rarely inspires market confidence. But since American special forces loaded Nicolás Maduro onto a plane, investors have piled into Venezuelan government debt: ten-year-bond prices have risen from 33 to 43 cents on the dollar. The move is the biggest since 2023, when America lifted a ban on trading the country’s assets.

Venezuela's President Nicolás Maduro in Caracas, Sept. 15.

This does not mean that traders are now upbeat about Venezuela’s prospects. The government has defaulted on all but two of its loans since 2017, when America placed the economy under heavy sanctions. GDP shrank by 3% in 2025, owing to falling oil sales, which constitute most of the country’s exports. Although Mr Trump has vowed to revive its oil industry, there is plenty of reason for scepticism.

But nearly a decade in default has made Venezuelan debt ultra-cheap, and the prospect of recovering even a few cents on the dollar is enough to excite investors. Venezuela’s creditors could not negotiate with Mr Maduro, since sanctions forbade American courts from recognising him as president. Even if the Trump administration struggles, or does not try, to revive Venezuela’s economy, it could still help the government restructure its debts.

The government owes at least $95bn, or 115% of GDP, to three groups of creditors, according to the most recent reliable figures, which were last updated in 2024. Most of the debt is denominated in foreign currencies. The biggest group of creditors is private bondholders, to whom the government owes at least $60bn including arrears payments. Many are firms, such as Elliott Management, that buy distressed assets. Beyond that, it is difficult to say much about the group, since many of the purchases were conducted quietly to avoid attention. The need to uncover their identities will slow any negotiated settlement.

Another group of creditors never willingly lent Venezuela a cent. In the 2000s Hugo Chávez, Mr Maduro’s predecessor, nationalised swathes of the country’s oil industry. Foreign firms had oil fields and other assets whisked away, and subsequently turned to Western courts seeking damages. In 2019 one such court ordered Mr Maduro to pay $9bn to Conoco Phillips, an American firm. He refused, unwilling to bow to such flagrant Western imperialism, and the sum has since risen to $12bn including interest payments. In total, Venezuela now owes $22bn to oil companies. The creditors are hoping that America will ease sanctions on Venezuela, which would allow them to begin negotiations with the government.

Much, however, could still go wrong, not least because the next category of creditor could be a problem. Venezuela owes $16.5bn, or nearly all its bilateral debt, to China, which spotted an opportunity as Western lenders fled. Since 2007 China has lent Venezuela $60bn, and demanded oil at a discount as repayment. It has held up restructurings in other countries, and no loan like its instrument in Venezuela has been restructured before, which could make negotiations even more painful.

Mr Trump’s thirst for oil could also warp proceedings. A hefty pay-out to oil companies would make them more likely to return to pump more. If negotiations are slow, or yield little compensation, Mr Trump could force the Venezuelan government to pay oil firms directly or even set up his own oil-for-debt deal like China’s.

Moreover, Venezuela lacks cash. When a country restructures, the idea is that creditors accept a discount on repayment since they recognise that they have a better chance of obtaining the lower sum. But Venezuela’s finances are so dire that any sum it proposes is likely to be too low to win agreement. Even though the government has not been paying creditors since 2017, it has still been unable to run a budget surplus. And benefactors are scarce. China has stopped lending; Mr Trump has so far been more willing to use force than offer payment to extract oil. Without a source of cash, any restructuring will stall before it has started. Venezuelan bonds will look worthless rather than cheap. All countries in default are in a bind—few are so dangerously short of support.