Sign up for our daily briefing
Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.
Stay on top of the latest market trends
Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.
Sports news worthy of your time
Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.
Tech news worthy of your time
Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.
Get the inside stories
Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Want a daily digest of the top Denver news?
Get a daily digest of the most important stories affecting your hometown with Axios Denver
Want a daily digest of the top Des Moines news?
Get a daily digest of the most important stories affecting your hometown with Axios Des Moines
Want a daily digest of the top Twin Cities news?
Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities
Want a daily digest of the top Tampa Bay news?
Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay
Want a daily digest of the top Charlotte news?
Get a daily digest of the most important stories affecting your hometown with Axios Charlotte
A Venezuelan protester with "Freedom" painted on her face. Photo: Jesus Merida/SOPA Images/LightRocket via Getty Images
Investors hoping for the removal of Venezuelan President Nicolas Maduro may get more good news this week. The Trump administration signaled it may impose new sanctions against the country's oil sector — the lifeblood of Venezuela's economy and only major source of revenue.
Driving the news: The news followed the announcement Wednesday the U.S. would recognize Juan Guaido, head of Venezuela's National Assembly, as the country's president, not Maduro.
- "If things change in Venezuela it would be a tremendous opportunity," Jan Dehn, head of research at Ashmore told me late last year. He predicted Venezuela's bonds could double in price if a new president takes office.
The big picture: The country’s sovereign bond maturing in 2027 rose on Wednesday to its highest level since June. That’s notable considering the 2027 bond, and all but one of Venezuela’s other bonds, have been in default since November 2017.
- "There's a tremendous rally happening with the expectation that regime change leads to eventual restructuring of these bonds," said a fund manager from a major firm who asked not to be identified because he’s not permitted to discuss Venezuela’s debt. "The market is pricing in Maduro's exit as closer than we previously thought."
What's next? The oil sanctions may be the final nail in the coffin of a leader who has presided over an economy expected to hit 10,000,000% inflation this year with a 90% poverty rate.
My thought bubble: Maduro's ouster could be an inflection point in the country's history, but it will take a lot of work to turn what's effectively become a failing narco/petro-state into a functioning economy.
- Venezuela owes international creditors an estimated $150 billion. A new regime will need to come to terms with creditors in order to be given access to international credit markets again and start rebuilding.
- The country is producing oil at a 70-year low and analysts believe it could be three to five years before it is able to pump oil at its potential rate again.
- There would almost certainly need to be a bailout from the IMF, which hasn't even been allowed to enter the country in years. Simply assessing Venezuela's needs could take years and the economy could continue to falter even after an aid package is administered.
Go deeper: