Investors taking the long view still believe that the government will find a way to keep paying what it owes.
Their calculation, Mr. Buchheit said, is simple: whether the price of the bonds is below what might be recovered through a debt-restructuring agreement or as part of legal enforcement if Venezuela refuses to negotiate.
With the country’s political and social disarray, United States sanctions, and recent demands from the government of President Nicolás Maduro that bond investors agree to a debt deal, Venezuelan bonds have plunged in price from over 30 cents to the low 20s.
According to the data-gathering firm FactSet, established firms like Goldman Sachs, Fidelity and T. Rowe Price still sit on about $3.5 billion worth of bonds issued by the national oil company Petróleos de Venezuela, or Pdvsa.
By far, these have been the favorite bonds for foreign investors because the company is seen as the country’s cash cow, with its steady stream of foreign-exchange earnings and its wealth of overseas assets.
But as the Venezuelan economy continues to deteriorate, the risks of owning these bonds have grown significantly. The country’s foreign-exchange reserves have fallen below $10 billion — a level economists say comes close to insolvency — and experts say striking a debt deal will not be easy, especially with an unpopular government and dueling legislatures.
And so the selling has begun.
“We have significantly reduced our portfolio in Venezuela over the past year,” said Jan Dehn, the head of research at Ashmore Investment Management, an emerging-market specialist based in London. “This is a slow-moving train wreck.”