Restructuring Certain Debt of the Republic of Venezuela and PDVSA on the Same Terms

There has been considerable debate as to whether the bonds of PDVSA and the Republic of Venezuela should be restructured on the same terms. We have long believed that social, economic and political considerations strongly argue in favor of comparable treatment of the financial debts of PDVSA and the Republic as part of a comprehensive restructuring of the country's external obligations. This note discusses two proposed approaches to ensure comparable treatment of the bonds of each issuer and suggests an alternative approach under which PDVSA and the government would each guarantee the bonds issued by the other. As a result of these cross guarantees, holders of Republic and PDVSA bonds would have the same two primary co-obligors and it would thus be natural to restructure their credits on the same terms