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S&P declares Venezuela oil company PDVSA in ‘selective default’

The logo of the Venezuelan state oil company PDVSA is seen at a gas station in Caracas, Venezuela in this picture released January 13, 2017.— Reuters picThe logo of the Venezuelan state oil company PDVSA is seen at a gas station in Caracas, Venezuela in this picture released January 13, 2017.— Reuters picPARIS, Nov 15 — S&P Global Ratings said today it has placed Venezuela’s state-owned oil company PDVSA in “selective default” after it failed to make its interest payments on some of its debt.

“S&P Global Ratings lowered its corporate credit rating on Petroleos de Venezuela SA (PDVSA) to ‘SD’ (selective default) from ‘CC’,” the rating agency said in a statement, a day after another rating agency, Fitch, had announced a similar decision.

“We understand that PDVSA has not been able to meet the coupon payments on its 2027 and 2037 notes within its 30-calendar-day grace period — or the bond holders had not received the funds by that date — constituting an event of default under our methodology,” S&P said.

“Given PDVSA’s current sanctions and its already pressured liquidity position, we are uncertain about the company’s ability to pay the rest of its debt maturities within the grace period,” the statement said.

Both S&P and Fitch have already placed Venezuela in selective default after it failed to make US$200 million in payments on two global bond issues by the end of a 30-day grace period on November 12.

If a selective default spreads to other bond issues, particularly the nation’s US$150 billion sovereign debt, the South American country would likely be declared in full default.

A full default — recognition that Venezuela is unable to repay its massive debt — would have enormous consequences for the country, whose population is already suffering severe food and medicine shortages because of a lack of money to import them.

Venezuela’s finance minister arrived in Moscow today, a diplomatic source told AFP, as Caracas prepared to sign a debt restructuring deal with Russia, one of the country’s biggest creditors.

Finance Minister Simon Zerpa and the country’s agriculture minister were “in Moscow” the source said. The Venezuelan embassy in Moscow is set to hold a press conference later in the day. — AFP

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