⁍ Three small investment funds have started buying defaulted Venezuelan bonds.

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⁍ Bonds issued by Venezuela’s government trade near 7% of face value.

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⁍ Bonds do not generate income because Maduro’s government stopped servicing them in 2017.

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– Three small investment funds have started buying Venezuelan bonds as hopes of a change of government are fading and the South American nation is proposing a restructuring, according to sources and documents. Canaima Capital Management, headquartered on the English Channel island of Guernsey, Uruguay-based Copernico, and Cayman Islands-based Altana have bought heavily discounted bonds with face value of hundreds of millions of dollars, according to eight finance industry sources in Caracas, New York, Miami, Madrid, and London. The funds appear to be part of a small group of contrarian investors bucking the broader market consensus, which maintains there is little value in Venezuelan bonds that have not been serviced in nearly three years amid an economic crisis. The funds argue investors may be unable to recover missed interest payment after 2020 due to a statute of limitations clause in the bonds’ covenants—an assertion flatly denied by the main committee for Venezuela creditors. Altana, which two sources said was offering to buy bonds this year, has already taken legal action against Venezuela to try to force payment. In an Oct. 8 complaint filed with the United States District Court for the Southern District of New York, the fund demanded payment from Venezuela on $108 million of bonds. That came after investment funds Casa Express and Pharo Gaia Fund in late September won a $400 million summary judgment on defaulted Venezuelan bonds in US courts, a setback for Copernico’s team that could prompt more bondholders to seek judgments rather than waiting for a negotiation. Copernico did not respond to requests for comment.