New York Court Ruling Casts Uncertainty on Venezuela's CITGO and Debt Crisis
• New York Court of Appeals issued surprise ruling that PDVSA 2020 Bonds are subject to Venezuelan law, leaving bond litigation unresolved and casting doubt on CITGO auction.
• Ruling initially caused 2020 Bonds to drop but then recover on expectations of additional interest payments and index inclusion.
• Ruling reopens questions around US recognition of Venezuela's opposition Interim Government which controls CITGO holdings.
• Decision risks prolonging litigation and uncertainty around CITGO auction and Venezuela's debt, jeopardizing New York as financial center.
• Path of least resistance would be for credible representative of Venezuela and bondholders to reach settlement before CITGO auction moves forward.