Despite a tightening of economic sanctions on Venezuela under President Donald Trump, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) occasionally issues General Licenses clarifying, authorizing or exempting certain U.S. activities involving the Venezuelan government  or entities directly and indirectly affiliated with Petróleos de Venezuela, S.A (PdVSA).  Starting in January 2019, President Trump issued an Executive Order expanding the sanctions targeting PdVSA (see Trump and Trade Update of January 19, 2019).  One such license, General License 5, addressed the ability to enforce bondholder rights to any CITGO shares serving as collateral for the “Petróleos de Venezuela, S.A. 2020 8.5 percent bond.”  This general license removed certain restrictions contained in Executive Order 13835 (Section1(a)(iii)) as an obstacle to holders of the PdVSA 2020 8.5 percent bond gaining access to their collateral.

On April 10, 2020, OFAC issued General License 5C that delayed the license until July 22, 2020.  Until then, transactions related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8.5 percent bond are prohibited, unless specifically authorized by OFAC.  OFAC notes:  “To the extent an agreement may be reached on proposals to restructure or refinance payments due to the holders of the PdVSA 2020 8.5 percent bond, additional licensing requirements may apply.  OFAC would encourage parties to apply for a specific license and would have a favorable licensing policy toward such an agreement.”