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By The ETF Professor

After the close of U.S. markets Tuesday, Bloomberg reported Venezuelan President Hugo Chavez will not be sworn in on Thursday January 10. The likely reason is his ailing health. Chavez has been in Cuba for several weeks recovering from a fourth procedure to treat cancer.

Last week, it was reported that Chavez's situation was delicate. One leading physician even said the Venezuelan leader was leading his last days.

Until this week, concerns over the Venezuelan succession plan have not been a hindrance to the country's bonds or the small amount of U.S.-listed ETFs that offer exposure to Venezuelan debt, the only way for most American investors to access the South American OPEC member.

However, on Monday, bonds issued by Petroleos de Venezuela, the country's state-run oil producer, sank on succession fears. PDVSA's debt due 2017 plunged 1.88 cents to 99.09 cents on the dollar Monday, Bloomberg reported.

That bond issue is featured in the Market Vectors Emerging Markets High Yield Bond ETF (NYSEARCA:HYEM), an ETF that features an 8.73% weight to Venezuela. Another Petroleos De Venezuela issue, this one maturing in 2014 with a 4.9% coupon, is also found among HYEM's top-10 lineup. The ETF eked out a positive finish on Tuesday on light volume.

To this point, market participants have seemed resigned to the fact that if Chavez could not be sworn in on January 10, Vice President Nicolas Maduro would assume the presidency. Worth noting is that Venezuela's constitution mandates that new elections must be held within 30 days if Chavez is not sworn in on January 10.

Chavez has told Venezuelans to vote for Maduro if something should happen to him, so it could be the specter of Maduro taking over that has roiled Venezuelan bonds. The iShares Emerging Markets High Yield Bond Fund (BATS:EMHY), which now features an allocation of almost 17.5% to Venezuela, touched a new all-time high early Monday, but sold-off throughout the day and closed lower on Tuesday.

Over the past five trading days, the Market Vectors LatAm Aggregate Bond ETF (BONO), the only other ETF with noticeable direct Venezuela exposure, is lower by about 1%.

The recent decline in Venezuelan bonds could pressure these ETFs, but the upside is a buying opportunity and could emerge on hopes Venezuelans will see Chavez not taking office again as an opportunity to elect a pro-free market regime.

Venezuela needs to do that because the company's status as an OPEC member belies faltering production and the fact that Petroleos de Venezuela is by many accounts a decrepit company. In 2011, the country had the second-largest oil reserves in the world and reserves could be as high as 316 billion barrels when factoring in the Orinoco Belt, according to the Energy Information Administration.

The problem is Venezuela's oil is nationalized and Chavez did more to scare Western oil companies operating there than to welcome their much-needed investments and technology.

Should Venezuela make the transition from leftist regime to some semblance of a free market country, then another ETF becomes an interesting way to profit from that trend: The iShares S&P Global Energy Sector Index Fund (NYSEARCA:IXC).

At least five of IXC's top-10 holdings - Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), ConocoPhillips (NYSE:COP), BP (NYSE:BP) and Eni (NYSE:E) - have some exposure to Venezuela. That implies a new, non-leftist regime there could be a boon for more than just bonds. It could be good news for some of the most familiar oil stocks as well.

Disclaimer: Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Source: No Inauguration For Chavez; These ETFs May Be In Play