US moves to protect Citgo from creditors

©Agence France-Presse

Venezuela's opposition leader Juan Guaido has been working with PDVSA's creditors

Washington (AFP) - President Donald Trump's administration Treasury on Thursday moved to shield Citgo from Venezuela's creditors, preventing shares in the US-based oil company from being used to pay off debt held by Venezuela's state oil company PDVSA.

A $913 million payment on PDVSA's 2020 bond is due on Monday and it is backed by just over 50 percent of Citgo.

But the US Treasury altered the sanctions against Caracas to block any transaction involving Citgo shares used to service the debt without a specific exemption.

The new rule will remain in effect through January 22, Treasury's Office of Foreign Assets Control said in the announcement.

"As a result, during such period, transactions related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8.5 percent bond are prohibited unless specifically authorized by OFAC," it said.

Oil-rich Venezuela's economy is crumbling under the rule of leftist President Nicolas Maduro and millions have fled the country. The US has imposed punishing sanctions on the government to choke off access to cash from oil exports.

Opposition leader Juan Guaido, the national assembly speaker widely recognized as the country's legitimate leader, and his team have been trying to work with creditors to resolve the issue of PDVSA's debt payments.