Demonstrators hold a large Venezuelan flag outside the National Assembly, on the day Vice President Delcy Rodriguez was formally sworn in as the country’s interim president, as U.S.-deposed President Nicolas Maduro appeared in a New York court after the Trump administration removed him from power, in Caracas, Venezuela Jan. 5, 2026. Maxwell Briceno | ReutersVenezuela’s long-defaulted bonds are suddenly one of the hottest trades in emerging markets.Prices on the country’s benchmark notes due in October 2026 have surged to about 43 cents on the dollar, more than doubling since August. The rally comes as traders reassess recovery prospects on the distressed securities following the surprise removal of President Nicolas Maduro and a shift in U.S. policy that has opened the door to a potential restructuring of the nation’s debt.Investors are betting that a faster-than-expected political transition along with a clearer path to asset recovery could unlock value that has been frozen for nearly a decade. Venezuela fell into default in late 2017 after failing to make payments on overseas bonds issued by both the government and its state-owned oil producer PDVSA. Fidelity Investments and T. Rowe Price are among the holders that own significant amounts of these defaulted bonds, according to reports.Donato Guarino, an emerging-market strategist at Citi, said uncertainties remain particularly given lingering questions about the new government’s political alignment with Washington.”To the Trump administration, it’s key to extract the oil reserves the Venezuela has at the moment. That means that the GDP of Venezuela will go higher. That means that the ability to pay bondholders will be higher,” Guarino told CNBC. “However, in the short term, you may see some risks because what Trump did is a big gamble… there is a question of loyalty of the current new president towards Trump.”Trump has, in recent days, said the U.S. would “run” Venezuela, threatened Colombia and Cuba and renewed his push to acquire Greenland. Those remarks followed a weekend military strike that captured Maduro from Caracas and whisked him to the U.S. to face criminal charges without prior congressional authorization. Big risk remainsBarclays upgraded Venezuela bonds to market weight after rapidly unfolding political developments altered its outlook.The Wall Street firm a …
