Weeks before the deadline of a mega-buyback, a unit of state-owned oil giant Petroleos de Venezuela announced that investors representing nearly 96% of US$2.6 billion in structured bonds had tendered their paper via leads JPMorgan Securities and Deutsche Bank Securities, well above the 51% minimum (see table p. 22). To many, the deal's success was a foregone conclusion, given the fat premiums offered over market prices and the fact that covenants would be changed for any non-retired debt (see ASR 7/5, p.1).

Whether those covenant changes would harm remaining bondholders hinged on how many would snub the offer. Had the success rate fallen closer to 51%, the holdout investors might have suffered from weakened covenants, including the removal of two key PDVSA-controlled customers, Citgo Petroleum and Hovensa, from the structure.

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