Why Venezuela’s $240bn Debt Is World’s Largest Sovereign Debt Workout

Jun 24, 2026 - 16:00

EBM Newsdesk Analysis- Katie Winearls

Venezuela’s $240bn debt burden is set to be disclosed in full, comfortably exceeding the $150 billion to $200 billion range most analysts had pencilled in, as the country prepares for what will become the largest sovereign debt restructuring ever attempted. The disclosure comes only following the US-led removal of Nicolás Maduro, placing the scale of the debt squarely within a broader story of political transition rather than a routine fiscal update. For context on how geopolitical regime change tends to reshape sovereign risk pricing, Venezuela’s case may prove to be the most extreme example yet.

A Debt Pile Inherited From Maduro’s Rule

The gap between expectation and reality says as much about the opacity that defined Venezuelan public finances under Maduro as it does about the debt itself. Venezuela first defaulted on its external obligations in 2017, locking the country out of international capital markets for nearly a decade while the true scale of its borrowing remained obscured. With Maduro now removed from power, Venezuela’s new administration faces the considerable task of disclosing — and ultimately renegotiating — a debt burden that was effectively concealed or understated throughout his rule, a dynamic familiar from other post-authoritarian debt disclosures in recent decades.

An Economy a Fraction of the Debt It Owes

The core of the restructuring centres on an estimated $150 billion to $170 billion in external sovereign bonds and debt tied to PDVSA, Venezuela’s state oil company, with defaulted sovereign and PDVSA bonds alone running to roughly $60 billion outstanding. The broader $240bn figure climbs higher once domestic obligations are included. Venezuela’s forthcoming macroeconomic framework is expected to put the size of the economy at around $100 billion — meaning the country’s debt-to-GDP ratio will sit above 200%, a level rarely seen even among historically distressed sovereigns, and one that raises hard questions about what creditors can realistically expect to recover.

Centerview Partners Takes the Wheel — Without a Pitch Process

Centerview Partners has been appointed as lead financial adviser on the restructuring, notably without a formal competitive bidding process — an unusual step for a deal of this scale, and one likely to draw scrutiny from creditors seeking assurance the process is being run at arm’s length. The advisory mandate sits at the centre of one of the most legally and politically complicated restructurings in modern history, given Venezuela’s tangled web of bilateral lenders, including China and Russia, alongside traditional bondholders and a string of unresolved legal disputes tied to assets abroad — a complexity that echoes wider concerns about great-power lending exposure in distressed sovereign markets.

Citgo and a Sanctions Picture in Flux

Chief among those disputes is Citgo, the US-based refiner historically considered PDVSA’s crown jewel, which has been the subject of protracted legal battles as creditors attempt to attach Venezuelan assets to satisfy outstanding judgments. Untangling Citgo’s fate will likely be one of the thorniest elements of the entire process. Compounding the complexity, the restructuring is unfolding against a shifting sanctions backdrop: the US Treasury’s issuance of General License 58 signals a measured willingness to permit financial engagement with Venezuela without lifting the broader sanctions architecture outright — a pragmatic step that mirrors how Washington calibrates sanctions relief during politically sensitive transitions elsewhere.

The EBM Take

What makes this restructuring extraordinary isn’t simply its size — it’s that the debt is being unveiled by a government inheriting the fiscal consequences of a regime it didn’t create and a transition it didn’t choose the timing of. The $90 billion gap between prior estimates and the disclosed $240bn figure suggests distressed-debt funds built positions on badly outdated assumptions about Maduro-era opacity. With a debt-to-GDP ratio above 200%, recovery values will likely be determined as much by political negotiation between Washington, Caracas’s new government and creditors in Beijing and Moscow as by conventional debt-sustainability arithmetic. How quickly the new administration can convert this disclosure into credibility with international markets — without becoming hostage to the scale of what it inherited — may end up mattering more than the headline number itself.

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