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UPDATE 2-Venezuela bonds plunge after Maduro's restructuring vow

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CARACAS, Nov 3 (Reuters) - Venezuelan bonds tumbled on Friday after socialist President Nicolas Maduro announced plans to restructure the OPEC nation's external debt during an unprecedented economic crisis further complicated by U.S. sanctions.

The country's $3 billion 2026 bond and $4.2 billion 2031 paper both slumped 9.7 points, with yields surging to record levels of 39.4 percent and 37.9 percent respectively.

State oil company PDVSA's 2035 bond was down 7.1 points and its 2024 bond off 3.4 points.

Maduro, the 54-year-old successor to Hugo Chavez, said late Thursday that PDVSA would make this week's $1.1 billion payment on a maturing bond which had been the immediate point of anxiety for investors.

But he then announced a new commission to study the restructuring and refinancing of all future payments on foreign debt, which include about $50 billion in bonds.

Venezuela has few avenues to restructure, however, because of President Donald Trump's sanctions. Aimed at squeezing the ruling Socialist Party whom Washington accuses of installing a dictatorship, Trump's measures bar U.S. banks from participating in or even negotiating such deals.

Venezuela's move could create a sovereign debt crisis of a scale not seen in Latin America since the massive 2001 default in Argentina that shut it out of markets for years.

Lambasting a U.S.-led global "persecution" of his government, Maduro appointed Vice President Tareck El Aissami to head the debt commission. The former state governor has no known experience handling foreign debt matters and is on a U.S. blacklist as an alleged drug kingpin, accused of facilitating trafficking and links to gangs in Mexico and Colombia.

Venezuelan Economy Minister Simon Zerpa, who also wears the hat of chief financial officer of PDVSA, is under U.S. sanctions too for alleged corruption.

Venezuela's opposition was scathing about Maduro's plans, saying his government had no credibility abroad.

"Maduro won't be able to restructure the debt because nobody in the world trusts his government," said Julio Borges, head of the opposition-led congress, who has been campaigning hard to increase global pressure on Maduro.

'NO-ONE FLUENT IN MADURO-SPEAK'

The government and PDVSA owe some $1.6 billion in debt service and delayed interest payments by the end of the year, plus another $9 billion in bond servicing throughout 2018.

The next hard payment deadline for PDVSA is an $81 million bond payment that was due on Oct. 12 but on which the company delayed payment under a 30-day grace period. Failing to pay that on time would trigger a default, investors say.

That would expose Venezuela and PDVSA to lawsuits by creditors seeking to seize assets such as refineries in the United States.

It is also likely to make companies less willing to do business with Venezuela, potentially aggravating shortages of food and medicine and creating further problems for its vital oil industry already hobbled by under-investment.

Maduro surprised many by maintaining debt service after the 2014 crash in oil prices, diverting hard currency away from imports of food and medicine toward Wall St. investors.

Traders were left scratching their heads over Maduro's statements, which neither clearly declared default nor laid out a path to easing payment burden.

"No one is fluent in Maduro-speak with everyone scrambling for what this all means," said Siobhan Morden, Latin America analyst for Nomura bank.

Venezuela's debt is the highest yielding of emerging market bonds measured by JPMorgan's EMBI Global Diversified Index , paying investors an average of 31 percentage points more than comparable U.S. Treasury notes.

That is nearly double the spread on bonds issued by Mozambique, which is already in default, and more than six times the spread on bonds from war-torn Ukraine.

Maduro narrowly won election in 2013 after Chavez died and Venezuela faces another presidential vote next year.

Though there is widespread public disquiet at economic hardship, the opposition coalition is cracking after a disastrous showing at last month's gubernatorial elections, and there is speculation Maduro may bring forward the presidential vote, which had been expected for the end of 2018. (Reporting by Andrew Cawthorne in Caracas, Christian Plumb and Daniel Burns in New York; Editing by Jeffrey Benkoe and Susan Thomas)