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Tuesday, November 14, 2017
Venezuela just defaulted, moving deeper into crisis
Venezuela, a nation spiraling into ahumanitarian crisis, has missed a debt payment. It could soon face grim consequences.
The South American country defaulted on its debt, according to a statement issued Monday night by S&P Global Ratings. The agency said the 30-day grace period had expired for a payment that was due in October.
A debt default risks setting off a dangerous series of events that could exacerbate Venezuela's food and medical shortages.
If enough holders of a particular bond demand full and immediate repayment, it can prompt investors across all Venezuelan bonds to demand the same thing. Since Venezuela doesn't have the money to pay all its bondholders right now, investors would then be entitled to seize the country's assets -- primarily barrels of oil -- outside its borders.
If investors seize the country's oil shipments, the food and medical shortages would worsen quickly.
"Then it's pandemonium," says Fernando Freijedo, an analyst at the Economist Intelligence Unit, a research firm. "The humanitarian crisis is already pretty dire ... it boggles the mind what could happen next."