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...Despite elevated public sector deficits, we don't believe that Venezuela's fiscal accounts constitute a critical vulnerability for the sovereign's creditworthiness. The dominant features of Venezuela's credit profile have been persistently high inflation and highly restrictive capital and exchange rate controls. These elements have created an environment in which the sovereign is easily able to tap domestic funding at highly affordable rates without leading to a debt spiral. More importantly, we highlight that the negative outlook for the sovereign's Caa1 rating reflects mounting pressures on the country's external finances, which could trigger a balance of payments crisis. The increased risk of a currency crisis remains the key vulnerability for servicing external debt. Three factors underpin this dynamic: 1) Increasing share of local currency debt: The yearly funding mix has shifted strongly toward a preference for local currency instruments, which has resulted in a sustained decrease...
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Venezuela, Government of
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Venezuela, Government of - Analysis – 2014/10/17 – $300.00 – ...Venezuela's Caa1 sovereign rating and negative outlook reflect substantial economic and credit challenges that include: (1) growing macroeconomic imbalances, (2) low and tightening availability of foreign exchange that heightens the risk of a balance of payments crisis, and (3) a highly discretionary policy framework that reflects weak institutions. These challenges more than offset its credit strengths that include: (1) high income levels relative to emerging market and Latin American countries, (2) a favourable government debt structure, and (3) high fiscal strength. Underpinned by low, albeit rising, and affordable government debt, fiscal health depends on oil revenues from the state-owned oil company, PDVSA (Petr=leos de Venezuela S.A., Caa1 negative), the largest foreign currency earner in the country. Greater control over foreign exchange has allowed the sovereign to substantially boost social spending and expand the role of the public sector as the main driver of economic activity,...
Moody's: Venezuela's Caa1 reflects substantial challenges - Announcement – 2014/10/17 – $150.00
Ruling Against Venezuela Constrains External Liquidity, a Credit Negative - Issuer Comment – 2014/10/16 – $150.00 – ...Last Thursday, the World Bank's International Centre for Settlement of Investment Disputes (ICSID) ruled that the Government of Venezuela (Caa1 negative) has to pay Exxon Mobil Corporation (Aaa stable) $1.6 billion for the 2007 nationalization of the Cerro Negro oil project and other smaller investments. In addition, Venezuela must also pay nearly $400 million in back-due interest, bringing the gross repayment figure to $2 billion. Although the final compensation amount is lower than Exxon's initial $6.5-$7.0 billion claim, it is higher than our estimate for the ruling, which was less than $1 billion. At a time when foreign exchange is scarce given that official foreign exchange reserves at the central bank have fallen to around $2 billion, ...
Venezuela, Government of - Credit Opinion – 2014/09/15 – $150.00 – ...Category Moody's Rating Outlook Negative Senior Secured Caa1 Government Bonds Caa1 Venezuela Outlook No Outlook Country Ceiling: Fgn Currency Debt Caa1/NP Country Ceiling: Fgn Currency Bank Deposits Caa2/NP...
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Moody's Global Credit Research—Moody's Investors Service, a leading global credit rating, research and risk analysis firm, publishes credit opinions, research, and ratings on fixed-income securities, issuers of securities and other credit obligations. Credit ratings and research help investors analyze the credit risks associated with fixed-income securities. Ratings also create efficiencies in fixed-income markets and similar obligations, such as insurance and derivatives, by providing reliable, credible, and independent assessments of credit risk. For issuers, Moody's services increase market liquidity and may reduce transaction costs.
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