Latest / Trillions / The Venezuela Factor: Why High-Yield, Emerging-Market Debt Is Having a Moment

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The Venezuela Factor: Why High-Yield, Emerging-Market Debt Is Having a Moment · Trillions

0:06
Speaker 1: Welcome to trains.
0:06
Speaker 2: I'm Joe Webber and I'm Eric Delchernas.
0:11
Speaker 1: Eric twenty twenty six is already off to an interesting start.
0:14
Speaker 1: I was on vacation for the holidays, lost track of time,
0:17
Speaker 1: didn't know what day of the week it was, and
0:19
Speaker 1: then I woke up to the Venezuela news and was like,
0:21
Speaker 1: I guess I have to work on Saturday now. It
0:23
Speaker 1: was eventful.
0:25
Speaker 2: Yeah, absolutely, I think most people were shocked by it.
0:27
Speaker 2: But yeah, the news flow is ridiculous. It's like a
0:30
Speaker 2: year of news in a week every week. But in fact,
0:33
Speaker 2: the Venezuela thing already seems a little distant pass but
0:36
Speaker 2: it is a major deal. And we were struggling to
0:40
Speaker 2: get somebody on ETFIQ, the TV show I do we
0:42
Speaker 2: want to talk about this? So I did a f search,
0:45
Speaker 2: which is the search through ETFs, and I said, okay,
0:48
Speaker 2: terminal on the terminal which ETFs hold at least one
0:51
Speaker 2: percent of Venezuela, and only four results, and they're all
0:55
Speaker 2: bond funds. And the only one that had the one
0:58
Speaker 2: that had the highest and was act was vemmy right,
1:01
Speaker 2: and that's the het v emy and this is an
1:06
Speaker 2: active manager. I hadn't heard of them. I know Vertics
1:08
Speaker 2: it was a white label, but Stone Harbor was the
1:10
Speaker 2: name of the manager. I basically reached out to my
1:13
Speaker 2: buddy seth Over at Vertice.
1:14
Speaker 1: He hooked us up with.
1:16
Speaker 2: Jim who is on the show today, and we had
1:19
Speaker 2: a great discussion. He came in at last minute and
1:23
Speaker 2: talked about the bonds and why he owned them, and
1:26
Speaker 2: he bought them a year ago, so he saw something
1:28
Speaker 2: pretty early, and I think that's interesting. Then I looked
1:31
Speaker 2: through the portfolio and it's doing really well, and there's
1:33
Speaker 2: some of these really interesting countries that are like really
1:37
Speaker 2: killing it, like Latin America countries, but also outside of that.
1:40
Speaker 2: So I thought we should really get into this like
1:42
Speaker 2: em debt situation because we could see other situations right
1:47
Speaker 2: where some really left for dead bonds get restructured and like,
1:50
Speaker 2: how can you benefit from that?
1:52
Speaker 1: Can't wait to continue the conversation. The Jim that you mentioned,
1:55
Speaker 1: Jim Craig, who is the CIO and head of Emerging
1:59
Speaker 1: Market and co founder at Stone Harbor. The ETF that
2:03
Speaker 1: we're going to be talking about Vitus Stone Harbor Emerging
2:06
Speaker 1: Market's high Yield bond ETF. Again, that ticket v E.
2:10
Speaker 3: M Y.
2:11
Speaker 1: Also joining us Damien sas hour fixed income analyst with
2:16
Speaker 1: Bloomberg Intelligence, this time on trillions around the world with
2:21
Speaker 1: emerging market's debt. Jim Damian, Welcome to Trillians.
2:27
Speaker 4: Thank you, thanks for having me.
2:29
Speaker 1: Okay, Jim, what did it feel like when you woke up?
2:32
Speaker 1: I was on vacation, woke up on that Saturday to
2:36
Speaker 1: you know, the US basically going into Venezuela and extracting
2:42
Speaker 1: its president Maduro as well as his wife. What did
2:47
Speaker 1: it feel like to wake up that morning? For you?
2:50
Speaker 4: It felt pretty good. We were anticipating something would be
2:53
Speaker 4: happening in short order. You did never know the timing,
2:56
Speaker 4: didn't know exactly what was going to happen, but that
2:58
Speaker 4: was certainly a pleasant surprise. We've been witnessing the kind
3:02
Speaker 4: of collapse of Venezuela for a long time, so this
3:04
Speaker 4: is a positive change in our view.
3:06
Speaker 1: When were you able to actually get exposure to the
3:09
Speaker 1: country because you know there's sanctions, It's it's very difficult
3:13
Speaker 1: to be thinking about this if you're an oil company.
3:16
Speaker 1: The only one that has a meaningful presence there is Chevron.
3:18
Speaker 1: They have a special waiver. So what makes emerging market
3:21
Speaker 1: debt different.
3:22
Speaker 4: So this is a country that defaulted and was restructured
3:26
Speaker 4: in the early nineteen nineties. In fact, I was part
3:28
Speaker 4: of that, part of that team. So the debt has
3:30
Speaker 4: been been outstanding and trading for quite a while. More recently,
3:33
Speaker 4: the sanctions were removed from trading the debt, and that
3:36
Speaker 4: was several years ago, and we've been accumulating that debt
3:38
Speaker 4: since then.
3:39
Speaker 1: How do you go about doing that?
3:40
Speaker 4: So trades pretty actively. So it's one of the more
3:43
Speaker 4: actively traded entities in our in the emerging market's step market.
3:47
Speaker 4: It trades over the counter. It's all denominated in dollars,
3:50
Speaker 4: has coupons and maturities. Obviously they're in default, so you're
3:53
Speaker 4: you're able to pick from a menu of options.
3:56
Speaker 2: Okay, quick question on the bond. So you bought them
3:58
Speaker 2: a year ago. I believe they're up like one hundred
4:00
Speaker 2: and forty percent in a year now. They went up
4:03
Speaker 2: like one hundred percent before the extraction, then they get
4:06
Speaker 2: another boost after the extraction. Was the run up in
4:11
Speaker 2: return because people thought an extraction was going to happen,
4:14
Speaker 2: almost the way like animals can tell a tsunamis coming
4:16
Speaker 2: before humans or would you have a restructuring, even if
4:21
Speaker 2: there wasn't an extraction or was this was this whole
4:24
Speaker 2: thing on bet on something happening with this guy.
4:28
Speaker 4: It's really the claim value of what you're getting when
4:30
Speaker 4: you buy default of debt. So whf you think about Venezuela,
4:34
Speaker 4: they've been into faults in twenty seventeen, So your claim
4:37
Speaker 4: value was par one hundred cents on the dollar plus
4:39
Speaker 4: past due entrants interest, which is about one hundred another
4:43
Speaker 4: fifty cents or so, So I'd say one hundred and
4:44
Speaker 4: fifty to two hundred points in claim value, and the
4:48
Speaker 4: dollar price was somewhere around twenty, So you're buying something
4:51
Speaker 4: at twenty. The claim value is very high. That the
4:54
Speaker 4: what is difficult part is figuring out the timing of it.
4:56
Speaker 4: So last year, the timing was getting closer to whatever
4:59
Speaker 4: the whatever that means. We didn't know there was going
5:02
Speaker 4: to be an extraction of Maduro, but there's going to
5:05
Speaker 4: be some sort of change, and that was closer, and
5:07
Speaker 4: as that closeness becomes more of a reality, the bond
5:10
Speaker 4: prices went up.
5:11
Speaker 1: How do you go about figuring out what percentage of
5:14
Speaker 1: the portfolio you should expose to something that could be
5:18
Speaker 1: you know, kind of a gamble.
5:21
Speaker 4: We do a lot of probability analysis and everything that
5:24
Speaker 4: we do, so we put probabilities around, what's the upside,
5:27
Speaker 4: what's the potential downside, and we weigh it based off
5:29
Speaker 4: of that, and we literally we do this every month
5:32
Speaker 4: for everything in our portfolios. The probability that Venezuela was
5:36
Speaker 4: going to have a regime change of some sort had increased,
5:39
Speaker 4: so that increased our weighting in Venezuela, and that's something
5:42
Speaker 4: that we feel very strongly about. I mean, you have
5:44
Speaker 4: to factor in the downside as well, and we're not
5:46
Speaker 4: out of the woods yet, but that downside I think
5:49
Speaker 4: is lower now than before, so that warrants a larger weight.
5:55
Speaker 1: Okay, so the name of the ETF has emerging markets
5:57
Speaker 1: in it. Is Venezuela actually in our market or is
6:00
Speaker 1: it more like a frontier market.
6:03
Speaker 4: It's more of a frontier market right now, but it
6:06
Speaker 4: used to be just an emerging market. So it's hopefully
6:09
Speaker 4: coming back and adjusting the emerging market category.
6:12
Speaker 1: And I mean there's so that that line is obviously
6:15
Speaker 1: like where there are countries that are uninvestable almost and
6:19
Speaker 1: obviously Venezuela's entered into the realm of being investable. But
6:24
Speaker 1: do you how do you think about the risk reward
6:26
Speaker 1: for these profiles, because a lot of the countries that
6:29
Speaker 1: are in the in the portfolio, Lebanon being another one,
6:32
Speaker 1: like these are countries that are you know, the reward
6:35
Speaker 1: could be ten years off really, so how do you
6:37
Speaker 1: go about figuring out what's real and what is just
6:41
Speaker 1: too risky.
6:41
Speaker 4: That's a great point because the reward could be ten
6:44
Speaker 4: years off, for five years off, for two years off,
6:46
Speaker 4: and that time value of money is very very significant.
6:49
Speaker 4: About half of the emerging markets that morning and that
6:52
Speaker 4: genius and a rockstar, but about half of the market
6:55
Speaker 4: itself is actually investment grade, so a lots change over
6:57
Speaker 4: the past thirty four years I've been doing this. And
7:00
Speaker 4: the other half is non investment grade. And within that
7:02
Speaker 4: there are different tiers of non investment gradeness. Put it
7:07
Speaker 4: that way. In Venezuela Lebanon are at the lower end
7:10
Speaker 4: of that, and those are the ones where those can
7:12
Speaker 4: be kind of your deal drivers if you think about
7:14
Speaker 4: it from a financial terms, those are the ones that
7:16
Speaker 4: could have if you have a good information as you could,
7:19
Speaker 4: you could do really.
7:19
Speaker 1: Well in what can't you invest in right now?
7:23
Speaker 4: Things like Cuba, although Syria may come on board at
7:27
Speaker 4: some point. There's North Korea. These are countries which you
7:29
Speaker 4: that you really can't you can't invest into the.
7:31
Speaker 1: Ones when you use your compliance training at your job,
7:33
Speaker 1: it's like, yeah, do not do anything that involves these.
7:35
Speaker 4: Exactly Russia is in that right now. So these are
7:38
Speaker 4: these are countries where you just you you, you get
7:41
Speaker 4: put in the bag into the bad house if you
7:43
Speaker 4: if you invest in those for obvious reasons.
7:45
Speaker 1: But do you have to keep up on them because
7:47
Speaker 1: at some point, like maybe Russia comes back online and
7:50
Speaker 1: that becomes an opportunity. Right, you can't be completely in
7:53
Speaker 1: the dark about them.
7:54
Speaker 4: One percent. We have an entire team just going through
7:56
Speaker 4: the oh fact Office of Foreign Asset Control website, see
8:00
Speaker 4: what new new updates there are as a country been
8:03
Speaker 4: put on or taken off. That's very important and obviously
8:06
Speaker 4: you well maybe it's not obvious, but to me, you
8:08
Speaker 4: want to be ahead of that. So so country comes
8:11
Speaker 4: off of that sanctions list.
8:13
Speaker 1: As Venezuela sounds like it did, it did were there exactly?
8:17
Speaker 4: The Venezuelan bonds at one point traded at two so
8:20
Speaker 4: now they're trading at thirty five, So you want to
8:23
Speaker 4: be you want to kind of front run that flow
8:24
Speaker 4: if you can't be there when it's two.
8:26
Speaker 2: Right, Uh, let me bring Namien in because this he's
8:30
Speaker 2: a mile deep in this stuff. I always hear him
8:33
Speaker 2: over here, him talking about this. You're you're writing about
8:37
Speaker 2: this all the time. Were you into Venezuela a year ago?
8:41
Speaker 2: How have that has Let's just start with that country
8:43
Speaker 2: for you. How's your research been on Venezuela before and
8:48
Speaker 2: after the extraction?
8:49
Speaker 3: Well, I think we have to look back at the
8:51
Speaker 3: fact that these bonds were sanctioned. They weren't you weren't
8:53
Speaker 3: allowed to own them, right until President be former President
8:57
Speaker 3: Biden basically removed the sanctions on trading in the secondary market,
9:01
Speaker 3: which opened the door for Jim and for others to
9:04
Speaker 3: start buying up these bonds again. Right, So that's relatively recent.
9:07
Speaker 3: And if you look at like the return, I mean,
9:09
Speaker 3: you're absolutely right. I mean, if you look at the
9:10
Speaker 3: JP Morgan NB Venezuela bond index rose one hundred percent
9:14
Speaker 3: last year. But it's not alone Lebanon, Ukraine, I mean,
9:18
Speaker 3: Sri Lanka, Gana, all of these sort of Zambia, these
9:21
Speaker 3: distressed em dollar bond issues. Issuers have had tremendous years
9:25
Speaker 3: in twenty twenty five, so you have to kind of
9:28
Speaker 3: parse out how much of the move is due to people,
9:32
Speaker 3: you know, expecting regime change in Venezuela and how much
9:35
Speaker 3: was just the beta trade that we saw on em
9:37
Speaker 3: high yield over the better part of last year. My goodness,
9:39
Speaker 3: it's been a good run.
9:41
Speaker 1: But what's underlying that that beta trade? Like why there
9:45
Speaker 1: why the enthusiasm for countries that we haven't really been
9:48
Speaker 1: hearing that much about.
9:49
Speaker 3: I would say the risk sentiment, suppression of volatility, the vics,
9:52
Speaker 3: all the things that we look at, right, I mean
9:54
Speaker 3: vall is that cyclical lows across equities, bonds and effects, right,
9:58
Speaker 3: So I mean that's a perfect the environment for investors
10:01
Speaker 3: to go and you know extract carry right, and look,
10:05
Speaker 3: Venezuela doesn't pay off, right, I mean, these are the
10:07
Speaker 3: faulted bonds. There's no coupon income there. But you know,
10:10
Speaker 3: the point is to take a little bit of a
10:12
Speaker 3: punt on, you know, a very binary outcome makes a
10:16
Speaker 3: lot of sense when the bonds are treading at you know,
10:18
Speaker 3: five cents on the dollar, right, and the rest of
10:21
Speaker 3: the universe in em distressed is up in double digits plus. So,
10:25
Speaker 3: so you know, kudos to Jim and the team at
10:27
Speaker 3: Stone Harbor for identifying that, and you know, identifying the
10:30
Speaker 3: fact that the bonds are no longer sanctioned and that
10:32
Speaker 3: they do they do demand the place in investor portfolios,
10:35
Speaker 3: albeit probably a very small waiting, you know, relative to
10:39
Speaker 3: other more developed markets.
10:40
Speaker 1: Well that's a really good point, Jim, like the you
10:44
Speaker 1: wouldn't be able to get this exposure through any other
10:47
Speaker 1: ETF right, Like, so, how do you talk to institutional
10:50
Speaker 1: investors about how to put this into a portfolio when
10:55
Speaker 1: you know what you're offering here is not something that
10:58
Speaker 1: anybody else is going to get through, like you know, bond.
11:01
Speaker 4: Well, it's interesting because most of our most of our
11:03
Speaker 4: client bases is actually in institutional investors and they want
11:06
Speaker 4: that exposure. So they they view the market very differently
11:10
Speaker 4: than a lot of others. They view this as a
11:12
Speaker 4: this is a market that that has historically outperformed by
11:14
Speaker 4: the fixed income comes with higher volatility. They appreciate that,
11:16
Speaker 4: they understand it, but that volatility can be a friend
11:19
Speaker 4: as well, So they want that exposure. And something like
11:21
Speaker 4: a venezuela is something they understand from a from a
11:25
Speaker 4: risk and reward standpoint, and they want to be exposed
11:28
Speaker 4: to that. But to your point, I'm on the ETFs,
11:29
Speaker 4: aren't that many ETFs that that actually own it?
11:42
Speaker 2: This is where I think ETFs are perfect because this
11:45
Speaker 2: makes something very complicated and almost impossible for most people
11:48
Speaker 2: very easy. You just, you know, roll out of bed
11:50
Speaker 2: and you click buy and you own all these cool
11:52
Speaker 2: bonds right from these uh frontier countries, the diversification.
11:56
Speaker 1: Market countries, some of which happen to.
11:59
Speaker 2: Be em well, I'm looking at the portfolio. I mean, honestly, Kazakhstan, Ethiopia.
12:06
Speaker 3: Yeah, stand's a pretty good credit. I mean you got
12:08
Speaker 3: to take a step back here, I mean, because now
12:10
Speaker 3: you get it into the long reads with me. You know,
12:12
Speaker 3: like you know, Venezuela is a very unique situation, right,
12:15
Speaker 3: I mean you call it frontier. I mean it used
12:17
Speaker 3: to be one of the most developed of emerging markets
12:19
Speaker 3: going back to the seventies and eighties, and everyti things happened.
12:22
Speaker 1: Well, you know, ours figured prominently in a James bond.
12:25
Speaker 1: I learned through all.
12:26
Speaker 4: This, ye Caanakas.
12:28
Speaker 3: But but look, I mean I think you have to
12:30
Speaker 3: kind of take a step back and say, okay, you
12:32
Speaker 3: know it's not just ETFs guys, and I know this
12:35
Speaker 3: is you know, this is trillions here, but active fund managers.
12:38
Speaker 3: You know, I'm hard pressed. I did a whole research
12:40
Speaker 3: report last year. Last week, I was looking for anybody
12:42
Speaker 3: who had Benny on their books, and outside of a
12:45
Speaker 3: few funds run by Ashmore won by GMO, very few
12:47
Speaker 3: funds have greater than three percent of their portfolio in Venezuela.
12:52
Speaker 3: And that's after last year's one hundred percent plus game.
12:55
Speaker 3: So you know, it seems like investors have been very
12:58
Speaker 3: very I don't us a conservative, but they've been very
13:01
Speaker 3: They've been managing that concentration risk really really well. Because
13:03
Speaker 3: we're not just talking about many sovereign bonds. We're talking
13:06
Speaker 3: about Petavesa, the state on oil company. Again, these are
13:08
Speaker 3: all dollar denominated bonds, but those are the two big issuers.
13:11
Speaker 3: There's other little LACR, the utility, there's some other you know,
13:16
Speaker 3: sort of any linked debt out there, but you know,
13:19
Speaker 3: buying and large. What we're talking about is Petavesa and
13:22
Speaker 3: thezel Venezuela sovereign and those bonds sixty call it seventy
13:26
Speaker 3: billion dollars outstanding. Just how much of that can you
13:29
Speaker 3: own in a portfolio to give you, I don't know,
13:31
Speaker 3: double digit exposure. I mean it's it's going to be
13:34
Speaker 3: a challenge.
13:34
Speaker 2: Yeah, well let me bring real quick here. We don't separate.
13:38
Speaker 2: There's em debt, there's investment grade, which would be the
13:41
Speaker 2: big tickers EMB. Then there's high yield, which is the
13:45
Speaker 2: big tickers emhy. Those are the two big I shares
13:48
Speaker 2: products your high yield. So you're basically trying to be
13:51
Speaker 2: e e mhy. Now let me go back to Damien
13:55
Speaker 2: on this. Like let's say you're you know, I don't know,
13:57
Speaker 2: your college roommate texts you and says, hey, I saw
14:00
Speaker 2: this venezuela. This happens to me sometimes and it's like
14:04
Speaker 2: I kind of want to get in on this stuff.
14:06
Speaker 2: Like do you tell them, hey, look, uh, maybe don't
14:09
Speaker 2: do high yield? Do more of the investment grade or
14:12
Speaker 2: like is or should you have both? Like what's the
14:14
Speaker 2: normal person's play here in terms of like adding this
14:18
Speaker 2: to a portfolio and the difference between going high yield
14:21
Speaker 2: or investment grade.
14:22
Speaker 3: So I guess for me, Look, you know, I mean
14:25
Speaker 3: most people link emerging market debt forget about investment grade
14:28
Speaker 3: or highyield with an EM they assume it's HIG yield.
14:30
Speaker 1: Yeah, I mean that's the historical assumption.
14:32
Speaker 3: Yeah, you know, we were always the guys we em
14:34
Speaker 3: you know, portfolio managers and traders. We were always the
14:36
Speaker 3: guys they plunk us at the end of the row,
14:39
Speaker 3: right next to the US HIG yield guys. We were
14:41
Speaker 3: like the you know, the stepchild, right, the one nobody wanted.
14:44
Speaker 3: And you know, obviously as the acid classes developed over
14:46
Speaker 3: the better part of the last twenty five thirty years,
14:48
Speaker 3: you know, things have changed. But you know, far be
14:51
Speaker 3: it from me to judge, you know, what makes you know,
14:53
Speaker 3: investors kind of you know, look at emerging markets. In
14:56
Speaker 3: my opinion, it's going to be about carry. It's going
14:58
Speaker 3: to be about you know, higher coop. It's going to
15:00
Speaker 3: be about you know, and you're paid for that risk, right.
15:03
Speaker 2: All real quick. Just for anyone who just was like,
15:05
Speaker 2: what does that mean? What is just describe carry.
15:08
Speaker 3: A return over and above US treasuries. In my mind,
15:10
Speaker 3: if you're talking about US dollar debt, if you're talking
15:12
Speaker 3: about dollar denominated paper, you're benchmarked to the US Treasury curve. Right,
15:16
Speaker 3: So how much excess return excess yield are you getting
15:21
Speaker 3: by investing in an emerging market dollar debt all else
15:24
Speaker 3: equal maturity duration, equal relative to US treasuries and you
15:28
Speaker 3: get considerable. I mean, there's very few asset classes US
15:31
Speaker 3: dollar denominated fixed in COMACI classes that can give you
15:34
Speaker 3: that additional that that additional, that incremental carry, that incremental coupon.
15:38
Speaker 2: Yeah, so, Joel, I'll give you the numbers. The GOVT,
15:41
Speaker 2: which is the I shares government bond ETF to covers
15:44
Speaker 2: the whole curve is up seven percent in the past
15:46
Speaker 2: two years. VEMMI is up thirty one percent, EMHY up
15:50
Speaker 2: twenty seven percent, and emb up twenty one percent. So
15:53
Speaker 2: that's the carry, right, you got So it has worked
15:56
Speaker 2: out for sure, and high yields done even a little better.
15:59
Speaker 3: Yeah, fair to say, yeah, absolutely. And look, you know
16:01
Speaker 3: again what we're kind of when you look at you know,
16:04
Speaker 3: emerging market debt, most people it's mostly sovereign quasi sovereign issuers,
16:08
Speaker 3: you know, but in this instance, you know, there's there's
16:12
Speaker 3: you know, we're talking about both, right, We're talking about peteveesa,
16:14
Speaker 3: which is a you know, state on oil company i
16:16
Speaker 3: EA quasi sovereign issuer and you're talking about Venezuela the sovereign, right,
16:20
Speaker 3: So when you look at EMB, it's all sovereign, it's
16:23
Speaker 3: all quasi sovereign, but they avoid all EM corporate stuff. Right.
16:26
Speaker 3: So if you want to kind of expand the universe
16:28
Speaker 3: into EM corporates and start looking at the Pemmexes and
16:31
Speaker 3: the Petrobrass, well, PEMS is a quasi but you know
16:33
Speaker 3: valet is another one. You know, carry I mean incremental coupon,
16:37
Speaker 3: you know, return potential goes up that much more. So
16:40
Speaker 3: it's really about how you carve up the universe. And
16:43
Speaker 3: you know, from from I guess you know, Jim's perspective
16:45
Speaker 3: did a pretty good job of identifying what was really
16:48
Speaker 3: one of those last few vestiges of you know, incremental
16:52
Speaker 3: upside and EM because I mean, as far as the
16:55
Speaker 3: I could see, there were very few with the potential
16:58
Speaker 3: to do a triple digit return year over your return
17:00
Speaker 3: like Beny did.
17:01
Speaker 4: It's been a it has been a it's been a
17:03
Speaker 4: good year. There's been a not a lot of those
17:05
Speaker 4: opportunities out there. There's still a few out there that
17:07
Speaker 4: are right now. But no, to your point, you have
17:10
Speaker 4: to you have to identify them. That's the benefit of
17:12
Speaker 4: you know, tooting our own hon here from an active
17:14
Speaker 4: management standpoint. But I think it's important to note an
17:17
Speaker 4: actively managed GTF in this format I think really does
17:22
Speaker 4: work well in the strategy because you can't overweight those opportunities.
17:25
Speaker 3: Yeah.
17:25
Speaker 1: Actually, on the question of sovereign versus corporate, and you
17:30
Speaker 1: brought up Petavesa there, like, Jim, what exposure.
17:32
Speaker 2: Do you have?
17:32
Speaker 1: Is it all sovereign or and is there any desire
17:35
Speaker 1: to try and go get the Pedavesa debt.
17:37
Speaker 4: No, we definitely own Petasa debt. In fact, that's we're
17:40
Speaker 4: more overweight in the product and in the exactly. So
17:43
Speaker 4: overall we're about fifty five percent sovereign forty five corporate.
17:47
Speaker 4: So we do yea by design by design, so it's
17:49
Speaker 4: fit roughly fifty to fifty by design, but we're overweight
17:52
Speaker 4: sovereigns right now. But to your point, the corporate market
17:55
Speaker 4: is has grown substantially in size and volume, and it's
17:59
Speaker 4: very liquid and these or name brand you know, companies
18:02
Speaker 4: that are world renowned and they do quite well, and
18:06
Speaker 4: they actually offer a lot of extra yields, So why
18:08
Speaker 4: not take it well.
18:09
Speaker 3: Jim, can I ask you how much of your position
18:11
Speaker 3: is in those eight and a half percent Venezuela. I'm sorry,
18:14
Speaker 3: Petavesa twenty twenties, because you guys should be aware not
18:18
Speaker 3: all bonds are created equal, and this particular bond is
18:21
Speaker 3: secured by fifty point one percent of SIDCO, you know,
18:23
Speaker 3: SITCO here in the US, Venezuela, the three big huge
18:26
Speaker 3: refineries here in the US, as well as convenience and
18:29
Speaker 3: gas stations across the country. You know, there has been
18:32
Speaker 3: quite a bit of movement there. I'll let Jim go
18:34
Speaker 3: into it a little bit about Paul Singer and the
18:37
Speaker 3: folks at Elliott and some of the recovery that's already
18:40
Speaker 3: been priced into that particular issue.
18:42
Speaker 4: Right, and that bond never really sold off as much
18:44
Speaker 4: as the rest of the Venezuela and Pedasa debt, and
18:48
Speaker 4: it's now trading at par so the claim value is
18:51
Speaker 4: obviously very very real in that and that's working its
18:53
Speaker 4: way through the court system. We don't know that we
18:56
Speaker 4: preferred to put the risk in lower dollar price bonds
18:59
Speaker 4: and try to get somemize more of the upside, but
19:02
Speaker 4: I'm very happy that that's working its way through. I'm
19:04
Speaker 4: I'm happy for the bondholders that they'll get some recovery
19:07
Speaker 4: value there, and I think that's appropriate.
19:10
Speaker 2: Let me ask you about Latin America, because you twenty
19:11
Speaker 2: eight percent of the fun is in Latin America. A
19:14
Speaker 2: couple of weeks ago we did our twenty six ets
19:16
Speaker 2: to Watch in twenty six Joel knows. I picked OTGL,
19:19
Speaker 2: which is a latinam ETF. I saw the news in
19:22
Speaker 2: Chile about their new leader there. Just saw what happen
19:25
Speaker 2: in Argentina. That stock market was on fire. And I
19:29
Speaker 2: know from covering ets for twenty years, if there's ever
19:32
Speaker 2: like even a little hope that a pro business leader
19:35
Speaker 2: takes over for a socialist, the market goes wild.
19:38
Speaker 3: Right.
19:38
Speaker 2: I always say it's a geopolitical sports book. Is these
19:40
Speaker 2: single country em ETFs. You have a lot of these
19:44
Speaker 2: in here, and like Ecuador was a big winner, you
19:46
Speaker 2: know in Latin America, how big is this story of
19:50
Speaker 2: political change there?
19:51
Speaker 4: It is big because we are shifting more towards the right,
19:54
Speaker 4: and we had shifted more towards the left. A lot
19:57
Speaker 4: of reasons why, but the shift towards the right is
20:00
Speaker 4: very important. If you look at a country like Argentina,
20:02
Speaker 4: ten percent yields You've had a big transformation there. You've
20:05
Speaker 4: had a pro market government that came in and put
20:08
Speaker 4: some very significant fiscal discipline. Great team obviously engage with
20:13
Speaker 4: the US Treasury, which has been well publicized, and all
20:16
Speaker 4: of that is transformative from a country standpoint. So if
20:19
Speaker 4: you look down the road, you're going to see a
20:21
Speaker 4: lot of foreign direct invests of going in Argentina. Do
20:23
Speaker 4: the GDP coming down, inflation coming down, et cetera, which
20:26
Speaker 4: is we want to be part of that story.
20:29
Speaker 1: And how do you decide that twenty eight percent is
20:32
Speaker 1: the right number?
20:33
Speaker 4: Yeah, So there's a lot of opportunities around the world.
20:36
Speaker 4: You mentioned Lebanon and Ukraine, and there's a lot of
20:39
Speaker 4: Sub Saharan Africa, so it's kind of a nice buyer's
20:42
Speaker 4: market out there. So the twenty eight percent of Latin America,
20:45
Speaker 4: we don't have a huge weight in Mexican sovereign right now,
20:48
Speaker 4: we don't have a huge weight in Chile. A lot
20:50
Speaker 4: of things going very very well. The yields aren't high
20:52
Speaker 4: enough for us at this point. But we do like
20:55
Speaker 4: you know, Venezuela, and we like Argentina, we like Ecuador,
20:57
Speaker 4: We like countries such as that and that gets you
21:00
Speaker 4: from the bottom up to your desired weight. But those
21:02
Speaker 4: are other opportunities around the globe which are equally as fascinating.
21:06
Speaker 3: Well, I mean, you know, let me just expand a
21:07
Speaker 3: little bit on that pro right pivot across the whole
21:09
Speaker 3: of Latin America, referring to we have a number of
21:11
Speaker 3: elections coming up this year. Right, We've already seen Chile,
21:13
Speaker 3: that's the pro right pivot. By pro right, we mean
21:16
Speaker 3: more business friendly, more of a pro US pivot. We've
21:19
Speaker 3: got Peru coming up, and we've got quite frank Columbia
21:21
Speaker 3: coming up, sorry in May, and we all know what's
21:24
Speaker 3: going on there. And the fact is the Columbia President,
21:27
Speaker 3: Gustavo Petro can't sit for another term, right, so there
21:29
Speaker 3: will be changed. So by and large, the next person
21:32
Speaker 3: sitting in that seat will undoubtedly be more pro US
21:35
Speaker 3: than the current administration. And then you've got Brazil at
21:37
Speaker 3: the end of the end. Now, don't get me wrong,
21:39
Speaker 3: Lula has nine lives.
21:41
Speaker 1: We all know this.
21:42
Speaker 3: But you know, this pro right pivot that's going on
21:45
Speaker 3: across the whole of Latin America is real, and it
21:48
Speaker 3: makes sense, and it's good for business, and it's good
21:50
Speaker 3: for the bond prices, and that's the way the market
21:51
Speaker 3: tends to be trading. Here one thing about Venezuela. If
21:54
Speaker 3: you want to kind of read through into what this
21:55
Speaker 3: means for financial markets and for investors, and again Latin
21:59
Speaker 3: America speaks to this out and clear commodities, not just oil,
22:03
Speaker 3: but minerals and metals as well. Right, And you know,
22:06
Speaker 3: if you just look at you know, Venezuela, it's a
22:08
Speaker 3: top three holder of in ground gold. If you look
22:10
Speaker 3: at you know, gas, it's the seventh largest holder of
22:12
Speaker 3: gas reserves in the world. It's obviously got the largest
22:16
Speaker 3: proven reserves of oil in the world. If you think
22:18
Speaker 3: about this, if the US actually does have some modicum
22:21
Speaker 3: of say over you know, energy supply or oil supply
22:24
Speaker 3: coming out of Venezuela, you take Gyana, you take Venezuela,
22:27
Speaker 3: and you take the US and you add it all together,
22:29
Speaker 3: the US is going to have I guess a say,
22:31
Speaker 3: over thirty percent of the world's oil reserves. That's a
22:34
Speaker 3: massive geopolitical shift, considering Saudi Arabia controls only what twelve
22:38
Speaker 3: to fourteen percent, So this is this is kind of
22:42
Speaker 3: striking and this is pretty big news.
22:51
Speaker 2: All right, Jim, we've covered Latin America, Venezuela. Now your
22:54
Speaker 2: portfolio again. I look at it and I just it's
22:57
Speaker 2: like a trip around the globe. You know, it's really
22:59
Speaker 2: it's there's Honestly, there's a country year I'd never even
23:01
Speaker 2: heard of, and I feel like I'm pretty smart. But anyway,
23:05
Speaker 2: I'm gonna yell out a country or I'll say it.
23:07
Speaker 2: I won't yell it, but I'll say a country lightning round.
23:10
Speaker 2: You guys, give me real quick, like you're one sentence
23:13
Speaker 2: or two sentence take on this country in terms of
23:16
Speaker 2: your you know, optimism or pessimism.
23:18
Speaker 4: Okay.
23:18
Speaker 1: Jim also has to say if he's been there, Yeah, okay, okay.
23:21
Speaker 2: Great, okay, all right, Well, Dominican Republic.
23:25
Speaker 4: Been there, So a shift to the right. Similar to
23:30
Speaker 4: our prior conversation, a lot of yield tourism is up.
23:34
Speaker 4: It's a significant part been upgraded. Spreads your continue to tighten.
23:38
Speaker 3: You gotta let me talk about Dominican Republic. It has
23:41
Speaker 3: been one of my favorite calls for the better part
23:43
Speaker 3: of the last not only year, two years. And I'm
23:45
Speaker 3: not just talking the dollar denominated debt. They have local
23:47
Speaker 3: currency DP denominated debt as well. This is a country
23:50
Speaker 3: that is still running a current account deficit with the US,
23:53
Speaker 3: so it's not on Trump's radar yet. It is the
23:55
Speaker 3: fastest growing economy in you know, Latin America writ large.
23:59
Speaker 3: I've been there a couple at times of myself. They
24:00
Speaker 3: have some good golf courses, and look, the reality is
24:03
Speaker 3: Theminican Republic is it's credit rating, it's credit profiles improving,
24:07
Speaker 3: it's friendly the US business, and so yeah, I mean,
24:09
Speaker 3: I'm I'm very bullish on Dominican Republic. Okay.
24:14
Speaker 4: Sri Lanka have not been there extremely important in geopolitical sense,
24:18
Speaker 4: So if you think about where it is in the globe,
24:20
Speaker 4: there's a big ocean right around it, so it's very
24:22
Speaker 4: very important. China's made some huge in roads there. We
24:26
Speaker 4: think that that's changing where we went through a restructuring
24:29
Speaker 4: last year. We like the restructured debt a great deal.
24:33
Speaker 4: We do think there's been a fairly significant political transformation
24:36
Speaker 4: as well. But I think the big important point here
24:39
Speaker 4: is how strategically IMPORTANTCE Sri Lanka is in the world,
24:42
Speaker 4: and I think the US understands that, it appreciates it.
24:45
Speaker 4: So I would expect that that's going to be a
24:46
Speaker 4: big focal point for the US going forward.
24:48
Speaker 3: Yeah, you know, I've not been to Sri Lanka either,
24:50
Speaker 3: but I will say when you think Sri Lanka from
24:52
Speaker 3: an investor standpoint, you think China. And by the way,
24:55
Speaker 3: this just dials right back to Venezuela. I mean, did
24:57
Speaker 3: you know that loan commitments by country coming out of
24:59
Speaker 3: the China the Development Bank. Venezuela is the sixth largest
25:03
Speaker 3: country that has received loans from China. Right, So let's
25:06
Speaker 3: think about, you know, a workout scenario for these Veny
25:09
Speaker 3: and PETABSA bondholders. Right, there's a lot of bilateral loans
25:12
Speaker 3: to China and Russia that need to get paid off
25:14
Speaker 3: as well. And where do you sit within the capital stack, right,
25:18
Speaker 3: Who's priority, who's subordinated? These are questions that are going
25:21
Speaker 3: to take a while to kind of come through. This
25:23
Speaker 3: is going to be a very complicated restructuring in Venezuela.
25:26
Speaker 3: But when I think of Sri Lanka, I think of
25:27
Speaker 3: the port that's been funded by China. I think of
25:30
Speaker 3: you know, its ties to China, and whether or not
25:32
Speaker 3: those continue or not is going to be, you know,
25:34
Speaker 3: really front and center in the eyes of US dollar investors.
25:37
Speaker 2: All right, this Ivory coast, I couldn't even tell you where.
25:40
Speaker 2: I know it's in Africa, but like I couldn't point
25:42
Speaker 2: it out on a map. What's going on there?
25:44
Speaker 4: High growth, recently upgraded, cocre prices are high. It is
25:50
Speaker 4: really a poster child for what to do right in
25:53
Speaker 4: subterran Africa. We expect that that is a country that's
25:57
Speaker 4: going to continue to see a lot of foreign directive
25:58
Speaker 4: investment going in. I mean, it's major export is coco,
26:02
Speaker 4: so we like to see high coco prices there. But
26:04
Speaker 4: they've really gotten to handle on the finances and it's
26:06
Speaker 4: been reflected in the fact that they've been upgraded and
26:09
Speaker 4: spreads and yields are are much lower. So it's one
26:12
Speaker 4: of the countries we've actually started to take off a
26:14
Speaker 4: little bit. It's done so well.
26:15
Speaker 3: Yeah, well, I think I think one thing you have
26:16
Speaker 3: to point out, even though these are dollar denominated bonds
26:18
Speaker 3: from Coutevar, the it's part of Ekowas, so effectively the
26:23
Speaker 3: currency that's used domestically on the ground in Kotevar is
26:26
Speaker 3: the Euro. Right, it's a French ship's former French colony,
26:29
Speaker 3: and that whole region there's probably seven or eight of
26:30
Speaker 3: them from beneath to Berkino Fassis Senegal. They're all you know,
26:33
Speaker 3: euro denominated, so you know their balance sheets and their
26:37
Speaker 3: sort of trade deficits are a little bit easier to read,
26:40
Speaker 3: so to speak. But yes, Kotevar has had a wonderful run,
26:42
Speaker 3: unlike it's partners Senegal. But the risk there is a
26:46
Speaker 3: lot of the risk were seeing in places like Nigeria.
26:48
Speaker 3: It is very very close to the Sahel region, where
26:51
Speaker 3: you know, there's a lot of terrorism, there's a lot
26:52
Speaker 3: of isis, there's a lot of you know, potential for
26:55
Speaker 3: things to kind of derail the success story there. But
26:57
Speaker 3: now it's it's managed really really well well and it's
27:00
Speaker 3: had some considerable upside. Yeah, all right.
27:03
Speaker 2: Another country I was actually in the last well not
27:06
Speaker 2: about fourteen months ago, Vietnam. My wife is of Vietnamese descent,
27:10
Speaker 2: so we went there. We go like once every twelve years.
27:13
Speaker 2: And look, is a hard working group of people. But
27:16
Speaker 2: I don't sense a lot of innovation. Like it's a
27:19
Speaker 2: lot of like selling stuff out of the front of
27:22
Speaker 2: your house kind of economy, but very hard working. Nobody
27:26
Speaker 2: is like slacking off. There are no people just hanging around. Really,
27:29
Speaker 2: it's very busy, But what's the deal there, what's the
27:32
Speaker 2: trade there? Is that also opening up or is it
27:35
Speaker 2: just more you know that they're taking a lot of
27:39
Speaker 2: the manufacturing from China.
27:41
Speaker 4: They're taking a lot of the manufacturing from China. That's
27:44
Speaker 4: pretty well known and it's also known by the Trump
27:46
Speaker 4: administration as well. So if you think of the tariffs
27:49
Speaker 4: that were put in place, and really outside of China,
27:52
Speaker 4: Brazil to a certain extent, Vietnam and maybe handful of
27:56
Speaker 4: others really didn't affect our market, but Vietnam is one
27:59
Speaker 4: that that does stand out to us as being more vulnerable.
28:02
Speaker 4: So that's one that we've taken down more recently. Economy
28:05
Speaker 4: is doing very well. It's a hardworking society. It's a
28:07
Speaker 4: fantastic long term investment, but probably more from an equity
28:11
Speaker 4: standpoint than at debt.
28:12
Speaker 1: So there's a moment in which you start to pair
28:14
Speaker 1: back because you're just like, this is we've done this
28:16
Speaker 1: already and it's had its upside, and now we have
28:19
Speaker 1: to kind of laura. So when you go from two
28:21
Speaker 1: to four percent in Venezuela, you go from four to
28:23
Speaker 1: two in Vietnam.
28:24
Speaker 4: Right, And that happens a lot in our markets. You know,
28:26
Speaker 4: things get ahead of themselves and the euphoria comes in,
28:28
Speaker 4: and I think in a country lament Vietnam, I understand
28:31
Speaker 4: why just don't you don't get a lot of upside
28:33
Speaker 4: out of that?
28:33
Speaker 1: And how active do you have to be as an
28:35
Speaker 1: active manager in a portfolio like this? How often do
28:38
Speaker 1: you have to be recalibrating these numbers?
28:40
Speaker 4: I wish more often. These things take a while to
28:42
Speaker 4: play out, so it's usually you know, our well, our
28:46
Speaker 4: holding period can only be anywhere from a week to
28:49
Speaker 4: a year and a half on average, so they take
28:52
Speaker 4: a while to play out. We'd love to see him
28:54
Speaker 4: play out a little faster sometimes, but more often than not,
28:57
Speaker 4: they just take a while to play out. And Vietnam's
28:58
Speaker 4: are a classic points trades wall under two hundred now
29:01
Speaker 4: and spread and extra yield, so that doesn't offer a
29:04
Speaker 4: lot of value for us, you.
29:05
Speaker 3: Know, Jim, how much Vietnam is their outstanding right now?
29:08
Speaker 3: I mean I've always struggled to find any dollar dollar
29:10
Speaker 3: pay Vietnamese bombs.
29:12
Speaker 4: There's there's one, but I mean there's really not a
29:16
Speaker 4: lot out there.
29:17
Speaker 3: Then hence your point that it's an equity play, right,
29:18
Speaker 3: I mean, if you want to get your Vietnam explorerure.
29:20
Speaker 3: It's easy to do with VIA.
29:21
Speaker 4: I would do an aequity market, right.
29:23
Speaker 2: Okay. Actually, there's like two countries in here I've never
29:26
Speaker 2: heard of, and then a third one that I faintly
29:28
Speaker 2: think I might have heard of, but I don't even know. Okay,
29:31
Speaker 2: don't make fun of me. I'm just being honest here, Okay,
29:35
Speaker 2: I'm just gonna spell it. I mean, I'll try to
29:36
Speaker 2: say that's it. Surinam?
29:39
Speaker 4: What is that? Great little country? Were also defaulted its dead.
29:43
Speaker 4: Latin America also defaulted on its debt and has been
29:46
Speaker 4: restructured it. How did you know?
29:47
Speaker 1: I was going to say that I know everything.
29:50
Speaker 2: That's pretty good, dude.
29:51
Speaker 1: I've been doing this far too long.
29:53
Speaker 3: So yeah, I mean Surinam is northeast Latin Erica, you know,
29:59
Speaker 3: not far from g Know where you know Excellent Mobile
30:01
Speaker 3: has some offshore drilling rigs in place there, and you
30:03
Speaker 3: know some of the spillover people would kind of argue
30:06
Speaker 3: for is you know, some of the oil wealth that's
30:08
Speaker 3: being generated offshore outside of Guiana can kind of filter
30:11
Speaker 3: over into Surnon. But they've had their issues. They defaulted,
30:14
Speaker 3: as you know, and you know it's it is a country.
30:16
Speaker 3: I mean, what's what's its biggest export? I mean, well
30:18
Speaker 3: it is oil, right, yeah? So I mean so yeah,
30:20
Speaker 3: I mean you know, go figure right, I mean what
30:22
Speaker 3: do I know? But I think I think yeah, the
30:24
Speaker 3: bonds are probably they've come back quite a bit, but
30:26
Speaker 3: there's probably some upside there if you listen to people
30:28
Speaker 3: who are far smarter than I had.
30:30
Speaker 2: Joelhead, you heard of that country? Okay, thank you for
30:32
Speaker 2: being honest. One and one more I'd never heard. I'll
30:34
Speaker 2: spell it, see if you can guess it. Damien uh
30:36
Speaker 2: cursik san No, I have heard of that barely though gabone.
30:40
Speaker 3: Gave bones Easybone's an old steward.
30:46
Speaker 2: Yes, because I didn't look that bad last time. But
30:49
Speaker 2: where's this country?
30:50
Speaker 4: Africa as well? So it's an interesting little little oil
30:53
Speaker 4: trade if you think about certain think about how to
30:57
Speaker 4: how to frame it so it suffers from oil volatile.
31:00
Speaker 4: It's a small country. We happen to like it right
31:03
Speaker 4: now because we know it's oil. Prices here are are
31:06
Speaker 4: favorable to it. But it's I would say, on the
31:10
Speaker 4: on the spectrum of being dicey non dicey, it's one
31:12
Speaker 4: of the dice er credits. So we're pretty nimble in Gabon,
31:16
Speaker 4: but right now it's pretty attractive.
31:19
Speaker 1: How important is it to visit any of these countries.
31:22
Speaker 4: I'd say it's very important. I have not been to Gabone.
31:24
Speaker 4: I will say that Evan most of the other countries
31:27
Speaker 4: in our market, but it's very important. You know what
31:29
Speaker 4: you do. You meet with government officials, you try to
31:32
Speaker 4: meet with the Secretary Finance, the economy mysteries, you meet
31:35
Speaker 4: with a lot of the embassies. Great intel there. I
31:39
Speaker 4: mean it helps you paint a picture. So you can
31:41
Speaker 4: have all the great assumptions in the world, but when
31:43
Speaker 4: you get there, you really do figure out if they're
31:45
Speaker 4: right or if they're wrong, and that's what's helpful. So
31:46
Speaker 4: we typically visit thirty five forty countries a year.
31:50
Speaker 1: Jim, if we put on that optimistic here for Venezuela
31:54
Speaker 1: as we wrap restructuring of the debt is something that
31:58
Speaker 1: seems like it's going to be out there. As if
32:00
Speaker 1: we look ahead to what's next for Venezuela with that
32:02
Speaker 1: optimism had on, what would that restructuring look like and
32:05
Speaker 1: how would impact how you view investing there.
32:08
Speaker 4: So we would take our defaulted bonds in dollars and
32:11
Speaker 4: we'd sit across the table from Venezuelan's. Probably the IMF
32:14
Speaker 4: would be involved in assuming you a treasury, other investors,
32:16
Speaker 4: et cetera, and you hammer out a restructuring which allows
32:20
Speaker 4: them to grow. So the debt payments have to be lower.
32:23
Speaker 4: The probably the stock of debt needs to be lower
32:25
Speaker 4: as well, and it's something that gives us the ability
32:27
Speaker 4: to get paid back. So that restructuring is very similar
32:30
Speaker 4: to the I would expect to the restructurings that we
32:33
Speaker 4: dealt with in the early nineteen nineties, where you're exchanging
32:36
Speaker 4: your default the debt for new debt. There also may
32:39
Speaker 4: be what we call a new money component, which means
32:42
Speaker 4: you may want to put in more money. There could
32:44
Speaker 4: be an element there. There could be a value recovery right,
32:46
Speaker 4: or some sort of warrant that's given to you GDP
32:49
Speaker 4: warrant or an oil warrant like the old Venezuelan bonds
32:53
Speaker 4: that give you some upside if that does work, if
32:55
Speaker 4: the plant does work. But ultimately what you're going to
32:57
Speaker 4: be doing is exchanging your default the debt for new debt,
33:00
Speaker 4: which is then serviced by Venezuela and PETABSA and.
33:04
Speaker 3: You have to remember there. I mean, look before before
33:07
Speaker 3: the bonds, the fault in twenty seventeen in Venezuela. I
33:10
Speaker 3: mean you had nationalization by the jobs by Hugo Chovas
33:13
Speaker 3: in his regime of a number of projects on the ground.
33:15
Speaker 3: I'm thinking Conical Phillips. I'm thinking x on Mobile. Conical
33:17
Speaker 3: Phillips is own ten billion dollars and so that's why
33:20
Speaker 3: it's stock popped on the news. But the reality is,
33:23
Speaker 3: good luck trying to get somebody to pay you back
33:25
Speaker 3: for that. That's all part of a restructuring here and
33:27
Speaker 3: the conversations that go hand in hand. And I don't
33:30
Speaker 3: know if you just saw the news. You know, just
33:32
Speaker 3: over the weekend, President Trump had a bunch of US
33:35
Speaker 3: oil majors into the White House to talk about what
33:38
Speaker 3: a you know, Venezuela structuring might look like from from
33:41
Speaker 3: a perspective of investing, you know, US dollars into the
33:43
Speaker 3: oil sector. He didn't like what x On Mobile had
33:46
Speaker 3: to say. So, you know, this is a company that
33:49
Speaker 3: is owed one point five one point six billion because
33:52
Speaker 3: their assets were nationalized previously. That Venezuelan government has already
33:56
Speaker 3: paid back two hundred and twenty five million of that.
33:58
Speaker 3: So they've already almost agreed that they owe this money, right,
34:02
Speaker 3: so good luck try and I new tho she hd
34:03
Speaker 3: all this at It's going to be very, very complicated.
34:05
Speaker 3: There's a lot of different investoral interests involved. I mean,
34:08
Speaker 3: and like I said, the Chinese and Russian have a
34:10
Speaker 3: lot of bilateral loans in place as well. I mean,
34:12
Speaker 3: where do they fit in the capital stack?
34:15
Speaker 1: Well, this is what we get to watch.
34:17
Speaker 2: Yeah, no, it's fascinating and like this kind of stuff
34:20
Speaker 2: like is nowhere in a sixty forty portfolio. I mean,
34:23
Speaker 2: so I like ETFs that bring something different that your
34:26
Speaker 2: normal like sort of beta. This definitely checks that box.
34:30
Speaker 1: Jim Damien, thanks for taking a sum of tour the
34:32
Speaker 1: world our pleasure. Thank you, Thanks for listening to Trillions
34:43
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