How long can Venezuela avoid default?

THE mere mention of Venezuela should make most investors shudder. Its president, Nicolás Maduro, says that capitalism has “destroyed the planet” and vows to build a socialist Utopia. The country’s economic output has shrunk by more than a third since 2014, and it is suffering from dire shortages of food and medicine.

Nonetheless, one class of Venezuelan assets has delivered returns in recent years that would leave any investor licking his chops: bonds issued by the government and by PDVSA, the state oil company. Since January 2015 they have risen in value by nearly 60%, while every coupon has been paid at sky-high interest rates. “There has never been a bondholder’s better friend than Venezuela,” says Ray Zucaro of RVX Asset Management, a Florida-based investment firm.