Venezuelan sovereign bonds soar 90% as US allows the return of American investors

• Venezuelan bonds soared on Thursday after the US lifted bans on their trade.
• The US imposed the restrictions in 2019 due to concerns of an illegitimate election.

Venezuelan bonds rallied sharply on Thursday, as the US did away with bans that prohibited American investors from trading the country's debt.

Sovereign bonds climbed as high as 21 cents on the dollar, rising from about 11 cents earlier in the week, traders told Bloomberg.

And bonds from PDVSA, the state-run oil firm, jumped to around 17 cents, up from 7 cents previously. Venezuela started defaulting on sovereign and PDVSA bonds in 2017.

The sanctions were first enacted four years ago, and have kept US investors off of secondary markets. The 2019 measures were part of a Trump administration strategy to put pressure on Venezuelan President Nicolás Maduro to leave office, after his reelection was widely considered illegitimate.

But the trading restrictions, coupled with other sanctions, have only pushed Venezuelan debt into foreign portfolios, while Maduro is still in office.

Though measures curbing Venezuela's ability to issue new debt will remain in place, the US turnabout on trading in the secondary market comes after the Biden administration secured guarantees from Maduro's government to hold free elections next year.

"The US government retains the authority to rescind authorizations should the representatives of Maduro fail to follow through on their commitments," a Treasury Department statement said.

In loosening controls on the country, the US is also expecting Maduro to release a number of prisoners, including Americans who are deemed to have been wrongfully detained. According to the Wall Street Journal, five prisoners have been let go, including a Venezuelan opposition leader.

Other bans were also relaxed, such as a six-month easing on sanctions related to Venezuela's production and sale of oil. PDVSA has already begun reaching out to customers with crude contracts, Reuters reported.

Venezuela's gold mining sector is also back in business, with transactions allowed to resume with the country's state-led metals companies.