Karishma Vanjani
Few major asset classes are reacting dramatically to the shock of the U.S. move against Venezuela's government. Oil was up slightly. Equities are extending gains, continuing momentum from 2025. The geopolitical shock waves have nudged Treasuries higher only modestly.
The clear winners, at least so far, are two bonds that have been virtually untouched by much of Wall Street: debt issued by Venezuela and its state oil company, Petróleos de Venezuela, known as PdVSA.
PdVSA bonds maturing in 2037 -- the longest maturity -- now trade at 31.735 cents, a 35% jump from their 2025 closing price. Venezuela bonds have risen by a similar amount, trading at 39.436 cents. PdVSA is effectively Venezuela's alter ego, tied at the hip given that oil remains the lifeblood of the economy. These levels are well below par, but the sharp gains suggest improving expectations for an eventual recovery.
PdVSA and Venezuela bonds defaulted in 2017, meaning they stopped paying interest on their debt. Later, the U.S. imposition of sanctions further pressured prices. That left many emerging market fund managers underweight Venezuela and PdVSA -- but some asset managers held large positions, betting that regime change would revive prices.
Now, with the removal of Venezuela's President Nicolás Maduro, those bets are paying off.
"While conditions remain fluid and uncertainty elevated, we currently expect these developments to have a constructive impact on our portfolios," Jared Lou, portfolio manager for the William Blair Emerging Markets Debt Fund, told Barron's.
There's no concrete plan for what happens next, but Lou views Venezuela as a "very attractive" bet. He remains overweight the country relative to the benchmark in both the William Blair Hard Currency SICAV and Emerging Markets Debt fund versus their benchmarks.
The best-case scenario for investors would be a smooth political transition, the return of U.S. oil companies, higher future oil production, and a comprehensive debt restructuring. All of this would require the U.S. to ease sanctions and recognize a Venezuelan government as legitimate.
"While we believe that a restructuring is very unlikely to occur in 2026, we think the market will begin to price in a more optimistic scenario on progress for an eventual restructuring," said Anthony Simond, investment director of emerging market debt at Aberdeen Investments. He is also overweight Venezuela, with exposure split between sovereign and PdVSA bonds.
London-based asset manager Ashmore Group is another big believer in Venezuela. Venezuela is among the top holdings of the firm's Emerging Markets Short Duration and Total Return Fund, making up 51.3% and 9.4% of the funds, respectively. GMO allocates 5.4% to Venezuela in the firm's Emerging Country Debt fund versus benchmark allocation of 1%.
Both firms didn't respond to Barron's requests for comment.
These bets on Venezuela bonds didn't come out of nowhere. Some form of U.S. military intervention in Venezuela had been widely anticipated. A U.S. military buildup in the region pushed Venezuela bond prices higher in August. By the end of the year, they had doubled from earlier lows.
Prices jumped again Monday. Further gains "could depend on the ability of the US and Venezuela to work together and for production to increase substantially," wrote Morgan Stanley strategist Simon Waever.
Write to Karishma Vanjani at karishma.vanjani@dowjones.com.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 05, 2026 16:00 ET (21:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
