Venezuela faces a tough road ahead if it wants to restructure its $120 billion in debt.
The country's president, Nicolas Maduro, announced plans to restructure its massive foreign debt on Thursday, sending Venezuelan government bond prices sharply lower. Bonds set to mature October 2019 fell from 48 cents on the dollar to 37 cents Friday.
The restructuring effort will be led by Vice President Tareck El Aissami, who will also start "the fight against the financial persecution of our country," according to Maduro.
But Venezuela is staring down a series of U.S. sanctions that limit its path to restructuring.
On Aug. 25, U.S. President Donald Trump signed an executive order imposing sanctions on Venezuela thatprohibit the country from trading on new debt issued by the government or Petroleos de Venezuela (PDVSA), the state-run oil company.
That makes it harder for Venezuela to restructure to ease future payments.
Venezuela has largely gone out of its way to make its debt payments, even if it meant forgoing the purchase of food and basic goods. Venezuelans have experienced widespread food shortages and rampant inflation. But Maduro's latest declaration raises the likelihood of a default, according to Diego Moya-Ocampos, principal political risk analyst for Latin America at IHS Markit.