LATE-STAGE SOCIALISM: Venezuela inches closer to a formal default.

Venezuela and PDVSA are legally separate entities, so PDVSA’s default would not trigger Venezuelan CDS or a Venezuelan sovereign default. But there are myriad other overdue interest payments by both borrowers, and unless the money appears soon then Venezuela will be in formal default on all its international bonds.

Venezuela has summoned bondholders for negotiations in Caracas on November 13, but the talks are expected to yield little. Indeed, US investors will be wary of even attending, given that the person leading the Venezuelan side of the talks, vice-president Tareck El Aissami, has been sanctioned by the US Treasury as an alleged drug smuggler.

None of the big rating agencies have formally declared a default yet, but S&P Global Ratings on Monday lowered the country’s rating to CC, the second-lowest rung possible, and said there was a 50 per cent chance of a default within three months.

TANGENTIALLY RELATED: Venezuela Constituent Assembly Cracks Down On Media.

Venezuela’s Constituent Assembly has approved a law its authors say would punish messages of hate in broadcast and social media with penalties reaching 20 years in prison.

The new law comes in a period of rising political tensions over the rule of socialist President Nicolas Maduro.

The Assembly, created by Maduro in July and mainly composed of his supporters, bans any message transmitted through radio, television or social media that instigates hate. The new law is designed to encourage “broadcast message aimed at promoting peace, tolerance, equality and respect,” according to the legislation, as quoted by the Associated Press.

Or else.