Venezuelan Bonds Surge Over 80% Amid Hopes of Regime Change, But Rally Faces Uncertainty

Venezuela, a nation long crippled by economic mismanagement and international sanctions, has stunned investors this year with an over 80% surge in the value of its dollar bonds — the highest returns among emerging markets, according to JPMorgan data. The debt-defaulted country’s securities have soared to six-year highs, driven by renewed optimism for political change and potential U.S. policy shifts under President Donald Trump, who recently confirmed authorizing covert operations against President Nicolas Maduro’s government.

Analysts say expectations of regime change could pave the way for long-delayed debt restructuring talks, potentially unlocking value from bonds that remain deeply distressed below 30 cents on the dollar. However, the rally has shown signs of fragility, with investors growing cautious about how far prices can climb without concrete developments. Polymarket data indicates that the probability of a U.S.-Venezuela military confrontation before the end of 2025 has dropped to 30% from 70% a month ago, reflecting easing geopolitical tension.

Despite the excitement, some experts urge restraint. UBS Global Wealth Management’s Alejo Czerwonko warned that Venezuela’s debt saga is far from resolved, noting the country has been in default since 2017 and faces one of the most complex sovereign debt restructurings in modern history. With roughly $60 billion in defaulted bonds ballooning to around $150 billion including interest and other liabilities, investors may find that waiting for a political and financial turnaround comes at a significant cost.

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