Caracas — The prospect of a Venezuelan debt default triggering a clash between revolutionary socialists and foreign creditors has overshadowed an equally complicated dilemma facing the Opec nation: a standoff with its own citizens who are bondholders. Though Venezuela’s junk bonds are popular among high-rolling Wall Street funds, they are also widely held by Venezuelans due to a decade-long Socialist Party policy of subsidising the purchase of foreign debt by individual investors. Large Venezuelan businesses have also plowed significant resources into bonds to use the exorbitant yields to compensate for sharp declines in sales amid the implosion of the country’s socialist economic system. The result is that any future debt negotiations will include Venezuelans ranging from wealthy individuals to humble retirees and college professors. Many may be unwilling to accept the major losses implied by the restructuring that the country’s President Nicolas Maduro proposed last month, sending...
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