NEW YORK, Feb. 12 /PRNewswire/ -- Standard & Poor's today placed its
long-term, double-'B' rating on Petrozuata Finance Inc.'s $1 billion bonds on
CreditWatch with negative implications.
The rating action follows yesterday's placement by Standard & Poor's of
its single-'B' long-term and single-'B' short-term foreign currency sovereign
credit ratings of the Bolivarian Republic of Venezuela on CreditWatch with
negative implications. The CreditWatch action on Venezuela follows political
actions that have led to material capital flight and high real interest rates
at a time of unfavorable external conditions for Venezuela due to lower oil
prices and export volumes.
The increased political polarization has among other things has led yet
again to the government's removal last week of the head of Petroleos de
Venezuela S.A. (PDVSA; single-'B'/Watch Neg), the national oil company of
Venezuela.
These developments have increased the risk of adverse government
involvement in Petrozuata and the other Orinoco Belt heavy oil upgrade
projects, including Cerro Negro Finance Ltd. and Sincrudos de Oriente Sincor
C.A.
The government is currently considering several different proposals to
address falling investor confidence and its weakening capital account.
Imposition of broad exchange controls without more fundamental fiscal reform
would cause Standard & Poor's to lower its ratings on Venezuela, which could
have a negative effect on the rating of Petrozuata. However, more pro market
measures to reassure domestic and foreign investors would enable Standard &
Poor's to affirm the ratings on Venezuela at their current level. Standard &
Poor's expects to resolve the CreditWatch status on Petrozuata once the
CreditWatch status of Venezuela is resolved.
The bonds are guaranteed by Petrolera Zuata, Petrozuata C.A. Petrozuata is
a heavy oil upgrading project, owned by Conoco Orinoco (50.1%), a subsidiary
of Conoco Inc. (triple-'B'-plus/Watch Pos/'A-2'), and PDVSA Petroleo Y Gas
(49.9%), a subsidiary of PDVSA.
SOURCE Standard & Poor's
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Related links:
http://www.standardandpoors.com/ratings
CONTACT:
Terry A Pratt, +1-212-438-2080, or Bruce
Schwartz, CFA, +1-212-438-7809, or Peter Rigby, +1-212-438-2085,
all of Standard & Poor's
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