Trillions The Venezuela Factor: Why High-Yield, Emerging-Market Debt Is Having a Moment
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Jan 15, 2026 In this engaging discussion, Jim Craig, chief investment officer at Stone Harbor, and Damian Sassower, fixed income analyst at Bloomberg Intelligence, dive deep into the booming Venezuelan bond market. They explain how lifted sanctions have fueled a surge in bond prices, particularly highlighting Stone Harbor's strategic acquisition of distressed debt. The duo also explores the complexities of EM investing, discussing the importance of on-the-ground research and the potential restructuring of Venezuelan bonds. Discover how institutional investors are navigating this volatile landscape!
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Big Upside From Defaulted Claims
- Defaulted Venezuela bonds carried very high claim value versus their low prices, creating extreme asymmetric upside.
- Jim Craig increased weight as regime-change probability rose without knowing exact timing.
Size Positions By Probabilities
- Assign probabilities to outcomes and size positions using expected upside and downside.
- Recalibrate weights monthly as risk-reward and probabilities change.
Sanctions Removal Sparked Demand
- Removing sanctions opened Venezuela bonds to buyers and sparked major price moves.
- Damian notes the 2025 rally also reflected broader EM high-yield beta gains.