LATE-STAGE SOCIALISM: Market Gives Venezuelan President Maduro 12 Months Max.

Like many Wall Streeters with an eye on Venezuela, Nomura and its clients have investments in PdVSA bonds. Many distressed asset and global emerging market bond fund managers have been buying the debt of the Venezuelan oil company for years, hoping for a regime change. Instead, they’ve gotten late payments and headaches. A hard default is still very likely.

Morden said Wednesday that she shifted her thesis on regime change to match the consensus view among the participants of the Emerging Markets Trade Association in January. The EMTA members believe there will be a political transition within the next 12 months.

“This has only recently gained traction on the optimism of the election headlines,” she says. Snap elections are being held next month. PSUV is expected to walk away the winner, having banned most brand-named opposition leaders from running.

“The election cycle offers a convenient venue for a transition but still requires direct military intervention,” she thinks. If the sole opposing candidate Henri Falcon withdraws from the race, this would dampen market sentiment but not necessarily decrease the (likelihood) for regime change.”

Maduro must agree. He is currently purging military members who are not Chavistas or PSUV loyalists.

A comfortable exile for Maduro in exchange for a peaceful transition would be a decent outcome, but is Maduro willing to let go of the reins?