In this blog post, Timothy O'Toole and Brian Fleming* discuss the guidance that the Office of Foreign Assets Control (OFAC) provided to help U.S. persons who own bonds backed by Venezuela's state-owned oil company and its U.S. unit Citgo.  The sanctions on Venezuela would impact owners' ability to execute their bonds, should the company default. "On May 21, 2018, President Trump issued Executive Order (E.O.) 13835 which, in pertinent part, prohibits U.S. persons (a term of art that includes U.S. citizens, U.S. permanent residents and companies organized under U.S. law) from being involved in the transfer by the Government of Venezuela (GOV) of any equity interest in any entity owned 50 percent or more by the GOV, as well as related transactions in the United States. E.O. 13835 obviously created a dilemma for owners of the 2020 bond: In the case of a default by Venezuela, the order prohibited U.S. person bond-holders from executing on their interest in Citgo," O'Toole and Fleming wrote. "Worried about precisely this possibility, many of these bondholders contacted the U.S. regulator responsible for the Venezuela sanctions, the U.S. Treasury's Office of Foreign Assets Control (OFAC), for guidance."

*Former Miller & Chevalier attorney