By Davide Scigliuzzo
NEW YORK, Nov 16 (IFR) - A committee of the International Swaps and Derivatives Association ruled on Thursday that Venezuela and state-owned oil company PDVSA have formally defaulted on their bonds.
ISDA's determinations committee unanimously ruled there was a default, a move that triggers payments on credit default swaps - derivative contracts investors use to hedge their risks.
The committee said it would reconvene on Monday to discuss an auction that will eventually determine the amount paid out to buyers of CDS protection.
The face value of net CDS contracts outstanding on Venezuela's sovereign bonds is around US$1.3bn, according to data from clearing house Depository Trust & Clearing Corporation.
On PDVSA, net CDS contracts outstanding total a smaller US$250m.
Venezuela has been struggling to make payments on its international bonds amid a crippling economic crisis. (Reporting by Davide Scigliuzzo; Editing by Marc Carnegie)