- Hedge funds are buying discounted Venezuelan and PDVSA claims (ICSID awards, promissory notes, and trade receivables) as political upheaval revives hopes of a settlement or restructuring.
- Roughly $30bn in non-bond claims are in play, led by ConocoPhillips’ $10–11bn award and nearly $20bn of Citgo-linked litigation claims.
- Trump’s assertion of US control after Maduro’s capture has boosted the trade but drawn international condemnation and left Venezuela’s governing legitimacy contested.
- Investors face major uncertainty over claim validity, creditor priority, and the practical enforceability of awards against Venezuelan assets.
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The landscape in Venezuela has been irreversibly altered by the capture of President Nicolás Maduro and his removal to US custody, a move unprecedented in the region. The US military operation—styled as law enforcement for indictments unrelated to regime change—has opened up new legal and political trajectories for Venezuela’s liabilities, assets, and debt structure. This shift is currently spurring substantial investor and hedge fund activity in claims that were previously regarded as speculative due to political risk and enforceability challenges.
Financial claims—including ICSID arbitration awards, receivables from expropriated private assets, and litigation over oil industry nationalizations—are now seen by some investors as likely to be settled, especially given US statements that suggest direct control over Venezuelan resources and oil flows. The sizeable ConocoPhillips award and Citgo-related claims are most vivid examples, possibly forming anchor points in any comprehensive settlement or restructuring negotiation.
However, the international legal and political framework remains highly fragile. While Trump asserts control over Venezuela until a transition period, Delcy Rodríguez has in turn claimed legitimacy as interim president, and Venezuelan institutions (military, state-TV, PSUV) show defiance. The US’s justification under law enforcement statutes versus international law’s prohibition on unilateral regime changes remains contested. Enforcement of claims, even ICSID awards, requires functioning institutional cooperation or international pressure and assets.
Strategically, this moment offers substantial upside for holders of arbitration and expropriation claims—but with high risk. Those claims could be used as bargaining chips in a comprehensive restructuring that drops sovereign bond holdouts and clarifies hierarchy among different types of creditors. But lack of transparency over what claims are valid or quantifiable, potential pushback from non-US states, and the militarized nature of recent regime change actions could complicate outcomes. Provenance, chain of title, valuation, and enforceability of claims will likely dominate future legal and financial disputes.
Open questions include:
• Will US control persist long enough to enforce settlements or will Venezuelan institutions regain de facto autonomy?
• How will international bodies (ICSID, World Bank, US courts) respond to claims judging from both acceptance of jurisdiction and capacity to enforce awards?
• How will creditor classes (bondholders vs trade-receivable vs ICSID vs Citgo claimants) be treated in any restructuring—both from financial upside and fairness perspective?
• What precedent does this set for sovereign risk, expropriation compensation, and regime change economics globally?
Supporting Notes
- Maduro and Cilia Flores were captured in a US special forces operation (Operation Absolute Resolve) on January 3, 2026; moved to New York to face drug-related indictments.
- Trump announced during a press conference that the US would govern Venezuela—”run the country”—until a “safe, proper and judicious transition” occurs.
- International law experts, regional governments (Brazil, Chile, Colombia, Mexico, Spain, Uruguay) and UN bodies have condemned US actions as violations of sovereignty and the UN Charter.
- Hedge funds including Carronade Capital Management and Canaima Capital are acquiring rarely traded Venezuelan financial claims, especially ICSID awards, promissory notes, and trade receivables linked to PDVSA.
- Total value of such claims is estimated at ~$30 billion; ConocoPhillips has a single claim of approximately $10-11 billion; Citgo-related claims nearly $20 billion.
- The US capture of Maduro has revived bond markets in Venezuela, heightening hopes of a debt restructuring that includes non-bond liabilities.
- ConocoPhillips’ ICSID award dates from 2019, and its annulment appeal by Venezuela was dismissed in January 2025.
- Divergence exists between US and Venezuelan interim leadership about who holds legitimate executive authority; Delcy Rodríguez has been sworn in and rejected the notion of US control.