Petroleos de Venezuela SA's credit grade was cut to one notch above default by Fitch Ratings in the aftermath of President Nicolas Maduro's announcement that the country intends to restructure its global debt, including that of the state-run oil producer.
Fitch lowered PDVSA's rating to C from CC, citing last week's announcement by the Venezuelan government, and a missed payment on the company's bonds due 2027. The grace period for the $81 million interest payment, which was due last month, expires on Monday.
Analysts at Fitch said a default on the notes is "highly probable" and that its unlikely PDVSA will receive aid from the government as it runs out of money. Central bank reserves are at a 15-year-low of $9.7 billion, the majority of which is in gold. The downgrade brings PDVSA's rating in line with the sovereign, which was cut last week .
The C rating “suggests a default or default-like process has begun,” the analysts said. Fitch expects that in a restructuring, PDVSA's investors will recover 31 to 50 percent of their holdings, “and likely closer to the lower end of the range.”
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