Chavez IMF Withdrawal May Give Pimco, MFS Windfall

Bloomberg reports:

Venezuelan President Hugo Chavez's pledge to withdraw from the International Monetary Fund may violate terms of the country's foreign bonds, allowing investors to demand their money back.

Pacific Investment Management Co. and Alliance Capital Management are the biggest among dozens of investors who would get a $404 million windfall if the securities are redeemed because they own bonds that trade below face value, according to data compiled by Bloomberg. The country has $6.5 billion of notes that trade at a discount among its $20 billion in foreign bonds.

Chavez's decision to take over telecommunications and energy companies this year has made Venezuelan bonds the second- worst performers in emerging markets. The South American country promised when it issued the bonds to remain in the IMF, so exiting the Washington-based organization would trigger a so- called technical default.

Venezuela's leader ``continues to implement a radical agenda,'' said Matthew Ryan, who oversees $2.6 billion in emerging-markets debt, including $30 million of the bonds that trade below face value, at MFS Investment Management in Boston.

Socialism means stealing of private property.