Hedge funds holding Venezuelan sovereign and state oil company debt – including Broad Reach and Winterbrook Capital – have recorded sharp gains after the country’s defaulted bonds surged following the US-led apprehension of President Nicolás Maduro, according to a report by the Financial Times.
Venezuela’s government bonds, which have been in default since 2017, jumped to around 42 cents on the dollar, up from roughly 33 cents prior to the operation, while bonds issued by state oil firm PDVSA also rallied strongly. PDVSA notes maturing in 2035 climbed from about 26 cents to 33 cents, delivering windfall gains for investors that accumulated positions when prices were deeply distressed.
The move capped a rally that has been building since late 2025 and has rewarded hedge funds that spent years building exposure to Venezuelan debt, much of which had been trading at levels as low as 16 cents on the dollar a year ago amid sanctions and political deadlock.
As well Broad Reach and Winterbrook Capital asset managers including Allianz Global Investors and RBC BlueBay have also benefited from the surge, while Elliott Management is also exposed to Venezuelan assets through legal claims linked to PDVSA, having recently secured control of a major refinery asset subject to US approval.
“Venezuela is out of the deep freeze and back in play,” said Edward Cowen, chief executive of Winterbrook Capital, which advises and manages more than $220m in Venezuelan assets. He added that the market could see a shift from distressed debt specialists towards more mainstream credit and energy-focused investors as confidence improves.
Venezuelan bond prices collapsed in 2019 following US sanctions on PDVSA’s oil exports, the country’s main source of hard currency. Restrictions on US-linked entities trading the bonds were only lifted in 2023, leaving the market thinly traded and dominated by specialist distressed investors.
Broad Reach, which manages around $2bn in assets, began building positions in Venezuelan sovereign and PDVSA bonds ahead of Donald Trump’s 2024 election victory and added further exposure in early 2025. Chief investment officer Bradley Wickens said the firm identified early signs of political change, including opposition election victories and renewed US engagement through oil licences and diplomatic talks.
Venezuelan debt was the largest contributor to Broad Reach’s performance in early January, accounting for roughly five percentage points of gross returns, according to a person familiar with the matter. The strategy delivered a net return of 12 per cent in 2025.
Allianz Global Investors acquired Venezuelan bonds at around 10 cents on the dollar during the pandemic, according to portfolio manager Alex Robey, who said the firm maintained exposure in anticipation of a positive market reaction to political change.
The rally has also improved prospects for investors involved in Venezuela’s complex legal disputes. Elliott affiliate Amber Energy recently won a court-supervised auction to acquire Citgo, PDVSA’s US-based refinery, pledging around $2bn to creditors tied to a specific bond secured on the asset, although the transaction remains subject to appeals and regulatory approval.
Despite the gains, uncertainty remains high. Estimates for recovery values on Venezuelan sovereign bonds range widely, from below 30 cents to above 40 cents, and depend heavily on the pace of political stabilisation, oil production recovery and any future debt restructuring.
With unpaid interest included, analysts estimate Venezuela and PDVSA debt could total as much as $100bn, compared with an economy producing around $80bn of annual GDP, highlighting the scale of the challenge ahead.
