Venezuela is a nation that is spiraling into a humanitarian crisis and has missed a debt payment for which it could soon face grim consequences. As per the statement issued on Monday night by S & P Global Ratings, the country of South America has defaulted on its debt. The agency also mentioned that the country has also missed the 30 day grace period as well whose original due date of payment was due in the month of October. A default in the debt initiates the risk of setting off a dangerous set of events which could give rise to shortages of food and medicine in the country. If some holders of a particular bond demand the full and immediate repayment, it could result in prompting investors across the country to demand the same thing. The reason behind this is that Venezuela does not have the money to pay all its bond holders at this point of time which would then entitle the investors to seize the assets of the country like the barrels of oil outside the borders of the country. Venezuela has no other meaningful source of income other than the oil that it sells abroad. The government, meanwhile, has failed for years to ship in enough food and medicine for its citizens which has resulted in the Venezuelans waiting for hours in line to buy food and dying in hospitals for the lack basic resources.
If the investors seize the oil shipments of the country then the food and medical shortages would worsen within a very short period of time. Fernando Freijedo who is an analyst in a research firm known as the Economist Intelligence Unit said that if this happens, there would be huge disorder in the country. The humanitarian crisis is already pretty dire and it really boggles the mind of what could happen next. It is not immediately clear about the steps that the bond holders will take. Argentina went through more or less similar default and its bondholders battled with the government for about 15 years until settling in 2016. But each and every case is different. Venezuela has admitted that it would not be able to pay the debts anymore. The country and its oil company which is run by the state PDVSA, owe more than about sixty billion dollars just to bondholders. In total, the country owes even more which is estimated to be about 196 billion dollars. This is per the paper published by the Harvard Law Roundtable and authored by lawyers Mark Walker and Richard Cooper.