The potential removal of Nicolas Maduro has brought Venezuela's long-standing debt crisis into sharp focus. The nation, which officially defaulted in late 2017 after failing to make payments on bonds issued by the government and state oil company PDVSA, faces total external liabilities estimated at between $150 billion and $170 billion, including accrued interest and court judgments. With a nominal GDP of around $82.8 billion for 2025, Venezuela's debt-to-GDP ratio stands at between 180 and 200 per cent.
The largest creditors include international bondholders, often specialist distressed-debt investors, and companies awarded compensation through arbitration for past expropriations. ConocoPhillips and Crystallex are among those with multi-billion-dollar awards upheld by US courts. A Delaware court has registered about $19 billion in claims for the auction of PDV Holding, the parent company of US refiner Citgo, an asset central to creditor recovery efforts. However, Citgo's total assets are worth far less than the claims against it.
Caracas also owes bilateral debts to China and Russia, though precise figures are difficult to verify as Venezuela has not published comprehensive debt statistics for years. US sanctions, imposed since 2017, have limited the country's ability to issue or restructure debt without Treasury licenses. President Donald Trump has said the US will "run" the oil-producing nation, but it remains unclear how sanctions policy will evolve.
A formal restructuring is expected to be complex and lengthy, potentially anchored by an IMF programme. However, Venezuela has not had an IMF consultation in nearly two decades and remains locked out of its financing. Analysts at Citigroup estimate that a principal haircut of at least 50 per cent would be needed to restore debt sustainability. Under one scenario, creditors might receive a 20-year bond with a coupon of about 4.4 per cent and a 10-year zero-coupon note, offering a net present value in the mid-40s cents on the dollar.
Despite the challenges, Venezuela's distressed debt has rallied in 2025, with bonds returning about 95 per cent at the index level. Many bonds now trade between 27 and 32 cents on the dollar, reflecting speculative bets on political change. Yet, the path to restructuring remains fraught with legal and political obstacles.
