The U.S. Court of Appeals for the Second Circuit has upheld the validity of the PDVSA 2020 bonds. The securities were issued in October 2016 as part of an exchange in which bonds due in 2017 were swapped for new bonds maturing in 2020. A 50.1% stake in Citgo Holding, the parent company of oil refiner Citgo Petroleum, was pledged as collateral for the issue. Bondholders representing 39.4% of the total issue agreed to the exchange; in October 2019, PDVSA stopped making payments on the bonds.
The ruling affirmed a decision by Judge Katherine Polk Failla, issued in September 2025, that approval from Venezuela’s National Assembly was not required to issue the bonds. The court also ruled that decisions made by the country’s parliament in 2016 and 2019 have no legal effect on assets abroad. The lawsuit seeking to invalidate the issue was originally filed by PDVSA and affiliated companies, which alleged that the bonds violated constitutional requirements because they had not been authorized by parliament.
The verdict affects the process of selling PDV Holding’s assets in Delaware. In November 2025, a federal judge awarded the company to Amber Energy, an affiliate of the Elliott fund, for $5.9 billion. The decision is being appealed, and the appeals court heard arguments on October 21. The proposed distribution plan calls for more than $2 billion to go to holders of PDVSA 2020 bonds. However, enforcement of the collateral is temporarily restricted under OFAC License No. 5Z, which is in effect until November 5.
Full story: U.S. Court of Appeals Upholds Validity of PDVSA 2020 Bonds