Nomura admits part in Goldman Venezuelan bond deal

  • Published
ProtestorsImage source, Getty Images
Image caption,
Protestors outside Goldman Sachs headquarters in New York on Tuesday

A Japanese investment bank has admitted it was part of a controversial deal with Goldman Sachs to buy Venezuelan government bonds.

Nomura Securities said it also bought about $100m worth of the bonds last week, according to Reuters reports.

Goldman Sachs has faced fierce criticism for its purchase of $2.8bn worth of similar bonds.

Opposition leader Julio Borges accused Goldman of "aiding and abetting the country's dictatorial regime".

Venezuela's government, led by President Nicolas Maduro, is desperately in need of financial support.

He has also drawn international condemnation for abuses of power and human rights violations.

His opponents say the purchase has given him a financial lifeline.


Venezuela's oil-dependent economy, crippled by low oil prices, has been in recession for four years, and now faces shortages of food and medicine, with inflation thought to be about 800%.

On Wednesday the country devalued its bolivar currency by 64%, from 721 to 2,010 bolivars to the dollar.

However, on the black market the bolivar has sunk to about 6,000 to the dollar.

In the last two months, there have been some 60 deaths among protestors demanding early elections, freedom for jailed activists and foreign humanitarian aid.

Mr Maduro says the protests are a violent attempt at a coup and insists the country is the victim of an "economic war" supported by Washington.

Image source, Getty Images
Image caption,
Protestors in Caracas on Wednesday

Knock-down prices

The bonds at the centre of the controversy were originally issued by Petroleos de Venezuela (PDVSA), the state-run oil and natural gas company, in 2014.

Both banks bought them at knock-down prices. Mr Borges, who is president of the country's opposition-run Congress, said Goldman had paid 31 cents on the dollar.

Reuters reported that Nomura said its purchase had cost $30m.

Goldman said its asset-management arm acquired the bonds "on the secondary market from a broker and did not interact with the Venezuelan government".

"We recognise that the situation is complex and evolving and that Venezuela is in crisis. We agree that life there has to get better, and we made the investment in part because we believe it will," the investment bank added.

'Pig of a deal'

Mr Borges said: "As hard as it may try, Goldman Sachs ... cannot put lipstick on this pig of a deal for Venezuelans,"

Venezuela's opposition-controlled National Assembly voted on Tuesday to ask the US Congress to investigate the Goldman deal, which they called immoral and opaque.

Mr Borges said he would recommend that any future democratic government "not recognise or pay those bonds".

A small group of protesters outside Goldman's New York headquarters held signs saying "Goldman Sachs Sucks!" and "Don't Support Venezuela's Hunger Bonds."

Even at 31 cents on the dollar, Nomura is taking a risk buying the bonds. In November, its own head of Latin America fixed-income strategy, Siobhan Mordan, warned investors: "The bottom line for bondholders is not if, but when is the timing for debt default?"