You'll be surprised of how many people I know that think that's a good idea and actually support Chavez and socialism and all this leftist ideas... but they do it comfortably from their $250k condo with a few borders between them and the revolution... or university students who claim to be communists but are actually preppy suburb kids who just figure out this was a good way to call some attention while spending daddy's money.
Venezuela Nationalising MORE
- Thread starter blast19
- Start date
All the trained professionals and rich have already left or setting up to leave the country. No business or foreign money will invest in Venezuela. And without checks and balances, corruption may run rampant because all those who support Chavez will be saved and those who oppose him will be crushed. All will be left are the poor and uneducated in a floundering economy.
But hey, it's good to be King.
But hey, it's good to be King.
Not necessarily a flight out of VZ. I've been studying the soverign debt ratings for Venezuela and here's some observations throughout all of the whole Chavez nationalizing saga:
VZ still has a BB- rating by S&P on it's long term sovereign debt. Within the last 360 days, it has been upgraded by S&P and Fitch. Moody's is still keeping it at B2 throughout the past year. What's more interesting is to drill down into the ratings changes:
I'll start from 12/21/1999, using S&P (Long Term Foreign Currency - denominated debt rating)
DN B 12/21/99
DN B 2/11/02 *reaffirmation of deteriorating fundamentals at the sov. level
UP B 3/18/02 *economic fundies changed a bit, so S&P piped a note
DN B- 09/24/02 *pretty volatile 2002 for chavez eh?
DN CCC+ 12/13/02 *wow, he really got whammy. Junk bond territory
UP B- 7/30/03 *oil revenues anyone?
UP B+ 8/12/05 *more oil
UP BB- 2/3/06 *more oil
Based on the current events, I'd have to say that at WORST we could see a downgrade any day now from my friends a couple blocks away at S&P. I would have to imagine that we aren't going to see anything below a downgrade rating to a B from the current levels. Some reasons why we may see a downgrade to the B level would be:
Crude oil's price volatility, lotta folks unclear if we're going to head substantially lower
Nationalization: What does it all mean? Who's going to be affected?
The last time VZ was in any level above a B was from 1977 - 1983:
AAA: 10/5/77
AA: 8/13/82
A-: 2/11/83
BB: 3/28/83 *thrown in there since the downgrade was so rapid
Let's look at the short term:
ST Foreign Currency debt ratings are at a B for S&P and Fitch. Again, let's focus on S&P.
It's maintained that B rating since 3/3/05 (wow, my birthday.. Thank you Chavez..
)
If we look at the local currency Long Term debt, It's been at a BB- since 2/3/2006
In the lovely principles of HY, govt's are going to be more inclined to pay back the local currency debt rather than the FC debt. So, here's some things to watch before you declare the sky is falling: Watch for a divergence of the LT Foreign and Local debt ratings. If the Foreign component gets downgraded, while local remains the same, then, there's a flag. But, still doesn't spell the end of the world as we know it. The FC debt has been a bit more volatile than the LC debt, and with good reason, as it requires VZ to go into the FX market to perform conversions to deal with the FC debt paybacks, refundings, etc.
Looking at the country risk for VZ, let's go back in time to 1/24/2007 on our magic terminal:
The Economist on my terminal is saying that their risk assessment calls for Soveriegn and Currency risk to be rated a B going forward. The Soverign risk profile is still, however listed as Stable.
Currency risk, however, according to The Economist, is Negative. That change in view has apparently been brought on by "the nationalizaton". Hmmm...
Looks like VZ is facing the same banking sector risks as we are. According to the economist, their outlook is negative. They are basically saying that if their stock market witnesses a steep decline, either predicated by a drop in r.e. prices, or a combination of the "perfect storm" we are all seeing in the US MBS market, it will feed through to a deterioration in the non-performing loan ratio. Sounds to me like Chavez is sitting on his own time bomb. And G.W. had nothing to do with real estate prices in VZ.
All 3 ratings agencies have a stable outlook on the VZ govt bond ( 9 1/4% cpn) 03/03/11 (happy birthday cbk!) maturity.
The sky ain't falling yet, ya'll.
VZ still has a BB- rating by S&P on it's long term sovereign debt. Within the last 360 days, it has been upgraded by S&P and Fitch. Moody's is still keeping it at B2 throughout the past year. What's more interesting is to drill down into the ratings changes:
I'll start from 12/21/1999, using S&P (Long Term Foreign Currency - denominated debt rating)
DN B 12/21/99
DN B 2/11/02 *reaffirmation of deteriorating fundamentals at the sov. level
UP B 3/18/02 *economic fundies changed a bit, so S&P piped a note
DN B- 09/24/02 *pretty volatile 2002 for chavez eh?
DN CCC+ 12/13/02 *wow, he really got whammy. Junk bond territory
UP B- 7/30/03 *oil revenues anyone?
UP B+ 8/12/05 *more oil
UP BB- 2/3/06 *more oil
Based on the current events, I'd have to say that at WORST we could see a downgrade any day now from my friends a couple blocks away at S&P. I would have to imagine that we aren't going to see anything below a downgrade rating to a B from the current levels. Some reasons why we may see a downgrade to the B level would be:
Crude oil's price volatility, lotta folks unclear if we're going to head substantially lower
Nationalization: What does it all mean? Who's going to be affected?
The last time VZ was in any level above a B was from 1977 - 1983:
AAA: 10/5/77
AA: 8/13/82
A-: 2/11/83
BB: 3/28/83 *thrown in there since the downgrade was so rapid
Let's look at the short term:
ST Foreign Currency debt ratings are at a B for S&P and Fitch. Again, let's focus on S&P.
It's maintained that B rating since 3/3/05 (wow, my birthday.. Thank you Chavez..
)If we look at the local currency Long Term debt, It's been at a BB- since 2/3/2006
In the lovely principles of HY, govt's are going to be more inclined to pay back the local currency debt rather than the FC debt. So, here's some things to watch before you declare the sky is falling: Watch for a divergence of the LT Foreign and Local debt ratings. If the Foreign component gets downgraded, while local remains the same, then, there's a flag. But, still doesn't spell the end of the world as we know it. The FC debt has been a bit more volatile than the LC debt, and with good reason, as it requires VZ to go into the FX market to perform conversions to deal with the FC debt paybacks, refundings, etc.
Looking at the country risk for VZ, let's go back in time to 1/24/2007 on our magic terminal:
The Economist on my terminal is saying that their risk assessment calls for Soveriegn and Currency risk to be rated a B going forward. The Soverign risk profile is still, however listed as Stable.
Currency risk, however, according to The Economist, is Negative. That change in view has apparently been brought on by "the nationalizaton". Hmmm...
Looks like VZ is facing the same banking sector risks as we are. According to the economist, their outlook is negative. They are basically saying that if their stock market witnesses a steep decline, either predicated by a drop in r.e. prices, or a combination of the "perfect storm" we are all seeing in the US MBS market, it will feed through to a deterioration in the non-performing loan ratio. Sounds to me like Chavez is sitting on his own time bomb. And G.W. had nothing to do with real estate prices in VZ.
All 3 ratings agencies have a stable outlook on the VZ govt bond ( 9 1/4% cpn) 03/03/11 (happy birthday cbk!) maturity.
The sky ain't falling yet, ya'll.
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Money; Sex; and Power.
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ROFL
I wouldn't get too excited about Chavez. Much of his rhetoric is intended for his consituents, mainly the poor folks in the hillside shantys of Caracas.
The oil reserves of Venezuela are large but the crude has a extremely high sulfur content. The only country even remotely equipped to refine such nasty crude is the U.S. Sure, Chavez could sell that oil elsewhere but it would be at a huge discount.
So when I hear Chavez threaten the cut off oil supply to the U.S. I don't take it seriously. In the meantime the capital and intellectual flight from Venezuela continues. Hopefully some of those beautiful castilian green-eyed blond women will immigrate to the U.S.
The oil reserves of Venezuela are large but the crude has a extremely high sulfur content. The only country even remotely equipped to refine such nasty crude is the U.S. Sure, Chavez could sell that oil elsewhere but it would be at a huge discount.
So when I hear Chavez threaten the cut off oil supply to the U.S. I don't take it seriously. In the meantime the capital and intellectual flight from Venezuela continues. Hopefully some of those beautiful castilian green-eyed blond women will immigrate to the U.S.
I tend to agree. Nationalisation is also taking lace in Bolivia. Go through a mining town in Peru or Bolivia and you will understand how many miners on poverty wages don't get it how it can be that they, Bolivians, are paid so little yet the foreign company makes huge profits and the CEO of the foreign company is paid millions. Yes, they miss the fact that capital and expertise is required to exploit and distribute the resources and that learning how a company does it from being trained by them it is not the same as being the one who developed that expertise, BUT you can undertand how the growing resentment against foreign profiting from national assest comes about and is a growing trend.
