Venezuela's PDVSA Put on NEGATIVE WATCH FOR DEFAULT By S&P "Given PDVSA's current sanctions and its already pressured liquidity position, we are uncertain about the company's ability to pay its upcoming debt maturities at the end of the month and beginning of November," says S&P. "We have placed our ratings on PDVSA, including our 'CCC-' corporate credit rating, on CreditWatch with negative implications."

Venezuela's PDVSA Put on NEGATIVE WATCH FOR DEFAULT By S&P
"Given PDVSA's current sanctions and its already pressured liquidity position, we are uncertain about the company's ability to pay its upcoming debt maturities at the end of the month and beginning of November," says S&P. "We have placed our ratings on PDVSA, including our 'CCC-' corporate credit rating, on CreditWatch with negative implications." 

By Marcela Duenas
& Fabiola Ortiz
Standard & Poors


MEXICO CITY -- S&P Global Ratings placed its ratings on Petroleos de Venezuela S.A. (PDVSA) on CreditWatch with negative implications, including its 'CCC-' corporate credit ratings.

On August 25, 2017, the U.S government banned the trade in any new bonds or stocks of the Venezuelan government and PDVSA, as well as dividend payments or other distributions of profits to the Government of Venezuela from any entity owned or controlled, directly or indirectly, by them. Banks also cannot engage in new lending with the government or PDVSA. In September, the Venezuelan government had difficulty making a coupon payment on their sovereign bonds, driven by these sanctions. The coupon was paid a week after it was scheduled.

Given PDVSA's current sanctions and its already pressured liquidity position, we are uncertain about the company's ability to pay its upcoming debt maturities at the end of the month and beginning of November.

The CreditWatch placement reflects the uncertainty about the company's ability to pay its upcoming debt maturity on its 2020 senior unsecured notes scheduled to be covered on Oct. 27, 2017 for about $1.0 billion and the maturity of its 2017 senior unsecured notes scheduled to be covered on Nov. 2, 2017 for about $1.2 billion, given PDVSA's current sanctions and its already pressured liquidity position.

The CreditWatch negative listing means the ratings could be lowered or affirmed in the next week. We expect to resolve the CreditWatch listing once the company either fails to pay its upcoming debt maturities on the scheduled date ,or if it pays them down. If the company is unable to pay its maturities, the corporate rating will be lowered to 'SD', the rating on the 2017 and 2020 notes will be lowered to 'D', and the remaining current outstanding debt will be affirmed at 'CCC-'. If the company announces a general default all of the ratings will be lowered to 'D'.