Bonds are bought and sold every second of every day without attracting attention. But it is not often that the seller is the central bank of a brutal, cash-strapped regime faced with protests; the buyer, a bulge-bracket American investment bank; and the size of the deal in the billions of dollars. A report in the Wall Street Journal on May 28th that Goldman Sachs had bought bonds with a face value of $2.8bn issued by Venezuela’s state-owned oil company, PDVSA, for 31 cents on the dollar (ie, for $865m) caused a stink.
Julio Borges, an opposition politician and president of the National Assembly, lambasted Goldman on May 29th in an open letter to its chief executive, Lloyd Blankfein, for its decision to “aid and abet Venezuela’s dictatorial regime”. For all its sins, that regime has met its obligations to bondholders. Mr Borges vowed to advise future Venezuelan governments not to repay the bonds in question. Protesters gathered outside Goldman’s headquarters in New York. The bank acknowledged buying the bonds but said it had done so from a broker, not directly from the government, and invested because it believed that life in Venezuela would get better.