Frequently Asked Questions

662. What does General License 3H authorize with respect to Government of Venezuela debt, and what are the implications for U.S. and non-U.S. persons?

Answer

General License 3H authorizes U.S. persons to engage in all transactions prohibited by Subsection 1(a)(iii) of Executive Order (E.O.) 13808 or by E.O. 13850, each as amended by E.O. 13857, or by E.O. 13884, related to, the provision of financing for, and other dealings in the bonds specified in the Annex to General License 3H (GL 3H Bonds), provided that any divestment or transfer of, or facilitation of divestment or transfer of, any holdings in such bonds be to a non-U.S. person unless otherwise authorized by OFAC.  The authorization in GL 3H includes, for example, engaging in transactions related to the receipt and processing of interest or principal payments, and acting as a custodian for U.S. and non-U.S. persons’ holdings in GL 3H Bonds, including acting as a custodian for a non-U.S. person after that person has received GL 3H Bonds from a U.S. person in a divestment transaction.

Paragraph (b) of General License 3H authorizes all transactions and activities prohibited by Subsection 1(a)(iii) of E.O. 13808 or by E.O. 13850, each as amended by E.O. 13857, or by E.O. 13884, that are ordinarily incident and necessary to facilitating, clearing, and settling trades of holdings in the GL 3H Bonds, provided such trades were placed prior to 4:00 p.m. eastern standard time on February 1, 2019; this authorization aims to ensure that trades that were placed prior to February 1, 2019, are allowed to settle in the ordinary course, irrespective of whether the sale or transfer is to a non-U.S. person.

Paragraph (c) of this general license previously authorized all transactions and activities prohibited by Subsection 1(a)(iii) of E.O. 13808 or by E.O. 13850, each as amended by E.O. 13857, or by E.O. 13884, including transactions in securities and security derivatives, that were ordinarily incident and necessary to the wind down of financial contracts or other agreements that were entered into prior to 4:00 p.m. eastern standard time on February 1, 2019, involving, or linked to, the GL 3H Bonds.  This authorization allowed certain financial contracts and agreements that were entered into prior to February 1, 2019, that involved or were linked to the GL 3H Bonds to be wound down, including resolving the purchase and sale of securities, securities lending, repurchase agreements, and swaps and derivative contracts in securities.  This authorization, which was included in prior versions of this general license, expired at 12:01 a.m. eastern daylight time on March 31, 2020.  Parties may apply for a specific license to engage in activity previously authorized by paragraph (c) of General License 3H.

Paragraph (d) of General License 3H authorizes all transactions related to, the provision of financing for, and other dealings in bonds that were issued both (i) prior to August 25, 2017 (the effective date of E.O. 13808), and (ii) by U.S. person entities owned or controlled, directly or indirectly, by the Government of Venezuela, other than PDV Holding, Inc., CITGO Holding, Inc., and any of their subsidiaries, that would be prohibited by E.O. 13808 or E.O. 13850, each as amended, or by E.O. 13884. 

U.S. persons may continue to hold their interests in the GL 3H Bonds, but are subject to certain restrictions on the sale of those bonds in the secondary market.  General License 3H does not generally authorize U.S. persons to purchase or acquire new interests in the GL 3H Bonds, and as a result, such purchases are prohibited absent authorization from OFAC.  However, to the extent that divesting or transferring holdings in the GL 3H Bonds from U.S. persons to non-U.S. persons requires engaging in certain GL 3H Bond transactions, such as purchasing or settling purchases of holdings in the GL 3H Bonds, paragraph (a), as described in paragraph (e)(2) of General License 3H authorizes U.S. persons to engage in such transactions.  Note: paragraph (a), as described in paragraph (e)(2), of General License 3H does not authorize U.S. persons to purchase or invest in bonds issued by the Government of Venezuela other than GL 3H Bonds.

While non-U.S. persons may continue to deal in the GL 3H Bonds, to the extent transactions involve U.S. persons or the U.S. financial system, such transactions must comply with the terms of General License 3H and may not involve sales of any interests in such bonds to U.S. persons (other than as set forth in GL 3H and as described above) as U.S. persons are largely prohibited from purchasing such interests. 

Date Released
May 12, 2020