When Citigroup Inc. and JPMorgan Chase & Co., the two biggest U.S. banks in Latin America, balked at buying Argentine debt at an October government sale, Venezuela’s President Hugo Chavez stepped in.
Chavez bought $337 million of bonds from Argentina’s government Oct. 26, the biggest purchase of the nation’s debt by a single investor since its 2001 default. Chavez bought more than half the debt offered.
The bond purchases are part of a broader plan by Chavez to use record revenue from oil exports to influence social, economic and political policies and encourage opposition to the U.S. Chavez has dubbed President George W. Bush “Mr. Danger” and sought to embarrass him by offering subsidized heating oil to low income families in Boston and New York.
“A Hugo Chavez hedge fund; it’s terrifically ironic,” said James Barrineau, senior vice president responsible for Latin American economic analysis at Alliance Capital Management LP in New York, which manages $163 billion in fixed income securities and had $8 billion in emerging market debt as of Dec. 1. “The dangers are when the market heads south and they want to dump the bonds.”
