Venezuela's long-defaulted bonds have become a hot commodity in emerging markets, with prices more than doubling since August amid a dramatic shift in the country's political and economic outlook. The rally follows the U.S.-backed removal of President Nicolás Maduro, which has opened a potential path to restructuring the nation's massive debt.

The benchmark bonds due in October 2026 have soared to approximately 43 cents on the dollar. Investors, including major firms like Fidelity Investments and T. Rowe Price, are betting that a swift political transition and clearer access to Venezuela's oil reserves could unlock value frozen since the country's default in late 2017.

Analysts point to the Trump administration's decisive intervention as a key catalyst. "To the Trump administration, it’s key to extract the oil reserves... That means that the ability to pay bondholders will be higher," said Donato Guarino, an emerging-market strategist at Citi. However, he cautioned that significant risks remain, particularly regarding the loyalty and stability of the new government in Caracas.

The scale of the challenge is immense. Venezuela and its state oil company PDVSA have approximately $56.5 billion in outstanding unsecured eurobonds. When including past-due interest, total claims balloon to roughly $98.3 billion—about 119% of the country's projected GDP. Barclays, which upgraded Venezuela bonds to market weight, noted that ultimate recovery values will depend heavily on how quickly the crippled economy and oil sector can rebound.

Some market participants warn the rally may be premature. "There’s still a lot of risks there... I think it’s way too early to get too excited," said Jeffrey Sherman, deputy chief investment officer at DoubleLine.

The situation could deliver a major windfall for certain investors. Notably, Elliott Investment Management, led by billionaire Paul Singer, recently won U.S. approval for a $6 billion bid to acquire Citgo Petroleum, the refining arm of PDVSA, positioning the firm to potentially benefit significantly from the unfolding restructuring.