Knossos' bold Venezuela bet

May 9, 2017

As Venezuela grapples with low oil prices, economic obligations and political chaos, one hedge fund has bet with the government—until now

Kevin Gray

Few trades in Latin America have been as lucrative, or as gut-wrenching, as investing in Venezuelan bonds. Francisco Ghersi knows first hand.

Ghersi, co-founder of the Knossos Asset Management hedge fund, has ridden the volatile price swings in Venezuela’s bonds, frequently cashing in on some of the highest yields in dollar-denominated emerging market debt. 

"It is without a doubt a wild ride," Ghersi says. "Uncertainty is a constant in Venezuela. You feel like you’re constantly playing with fire."

Fears among investors that Venezuela could default on its debts have routinely turned the weeks leading up to each of its bond payments into tension-filled, rumor-stoked periods for bondholders. "It’s the never-ending question: Will they pay or not?" Ghersi says

Investors sighed with relief in April when Petróleos de Venezuela, Venezuela’s state-owned oil company known as PDVSA, made $2.2 billion in bond payments. For investors who scooped up...

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