Demonstrators gather in Caracas as Vice President Delcy Rodriguez is sworn in as interim president. U.S.-deposed President Nicolas Maduro appears in a New York court. Venezuela’s defaulted bonds see a surge in trading, reaching 43 cents on the dollar. Recovery prospects are reassessed following Maduro’s removal and a potential debt restructuring door opening.

Investors are optimistic about unlocking frozen value in Venezuela’s defaulted bonds. The country fell into default in 2017, owing $56.5 billion in unsecured eurobonds. Fidelity Investments and T. Rowe Price hold significant amounts of these bonds. Uncertainties remain about the new government’s political alignment with the U.S.

Barclays upgrades Venezuela bonds to market weight amid political developments. The bank warns that the debt overhang could limit upside potential. Recovery values for the $98.3 billion in bondholder claims depend on economic and oil sector rebounds. Elliott Investment Management could benefit from the recent developments.

Jeffrey Sherman of DoubleLine cautions that the rally in Venezuela bonds may be ahead of reality. Recovery values are uncertain due to the country’s shrinking economy and halved oil production. Barclays estimates the bondholder claims at 119% of GDP. The new government’s alignment with the U.S. remains a question.

Read more at CNBC: Venezuela bonds are the hottest trade on Wall Street this week, but risks remain