A partial relief for Venezuela | Calamatta Cuschieri

Market summary

Main stock indexes in Europe pared most of the daily losses on Wednesday before closing, after reaching the lowest levels since late September. Equity gauges in New York also recovered a chunk of the decline by mid-session, while oil retraced some of its drop and gold slipped into negative territory.

The FTSE 100 fell 0.56%, with NMC Health having the largest slump, 3.44%. The DAX lost 0.44%, led by RWE's plunge of 1.9%, while the CAC 40's retreat of 0.27% was dominated by Technip FMC's move of 3.93% lower.

Venezuela restructuring deal

The government in Caracas, struggling with deadlines for debt repayment to creditors, reached partial relief with an agreement signed in Moscow. Ambassador Carlos Rafael Faria Tortosa announced, “Strong ties of friendship, solidarity and cooperation with Russia" made it possible for Venezuela to restructure $3.15 billion in liabilities”

Russia's Deputy Minister of Finance Sergey Storchak inked the document as the representative of his government, and revealed the South American country will now be able to support the domestic economy, improve solvency and boost chances all its creditors will be paid. The debt to Russia, which doesn't include Petroleos de Venezuela SA (PDVSA) or any other firm, will be returned by 2026, with minimal payments in the first six years.

That said, the deal with Russia has not yet resolved the payments due to bondholders on the country's sovereign debt. In fact, what we technically call a grace period, a period in which an issuer is given usually 30 days to fulfil its payment obligations from the official interest payment date, has expired last Monday. The government is saying that it has transferred the cash for payment, but bondholders have not received any payment. 

Venezuela expressed interest in increasing wheat imports from Russia and boost bilateral trade overall. The government of President Nicolas Maduro has already fallen behind schedule in the repayment of $420 million in sovereign bonds.

S&P Upgrades risk trend on UK Lenders

S&P Global Ratings revealed that "increased resilience" shown in earnings, more discipline and effective rewiring led it to improve its assessment of the country's "large and diversified" banks. The sector's economic risk trend was revised to stable from negative.

Although an "orderly Brexit" with time for transition is still the base case, talks with the European Union can still produce negative surprises, while economic growth in the United Kingdom is expected to slow to 1.2% per year on average from 2017 to 2019.

Disclaimer:

This article was issued by Rodrick Duca, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.