Investors Preparing for Venezuela’s ‘End Game’ Look to the Cheapest Bonds

  • Deutsche Bank recommends longer-dated, lower-priced bonds
  • More investors are asking about potential restructuring

With political and social tension in Venezuela on the rise, investors should prepare for the “end game” by seeking out the country’s lowest-priced debt, according to Deutsche Bank AG.

The cheapest bonds — which generally carry longer maturities — will provide the best return in a scenario under which Venezuela defaults and is forced to restructure, Hongtao Jiang, a strategist at the bank, wrote in a report. Jiang said while he doesn’t expect Venezuela to stop payments this year, it’s a possibility that bond buyers need to be prepared for.

“Severe financing stress and increasing difficulty in raising fresh money…