NEW YORK, May 15 /PRNewswire/ -- As part of the process of harmonizing
ratings between Fitch IBCA and Duff & Phelps Credit Rating Co. (DCR), which
are expected to merge by late May 2000, DCR has raised Venezuela's long-term
foreign currency sovereign rating to 'BB-' (Double-B-Minus) from 'B+'
(Single-B-Plus). Venezuela's long-term local currency sovereign rating
remains the same at 'B+' (Single-B-Plus).
Venezuela's long-term foreign currency rating has been supported by
continuing improvements in the country's balance of payments and external
liquidity, given the robust trends in the international petroleum market.
Public external debt continues to decline, having fallen US$800 million in
1999 to just above US$22 billion. Public external debt and debt service are
considerably less than in most 'BB'-rated countries. Moreover, Venezuela has
the highest external liquidity of any country in the 'BB' range -- more than
twice annual debt service, including all short-term debt -- which allows it to
weather prolonged periods of below average oil prices. Nevertheless,
Venezuela's sovereign ratings have been constrained by the country's excessive
dependence on oil revenues and the lack of policy initiatives to address this
problem. In addition, government arrears on unrated foreign currency bonds
held by local institutions, called Bonos Residentes, and to suppliers, in
conjunction with local currency (Venezuelan bolivar) bond defaults in recent
years, raise doubts about debt service willingness and management. Previous
defaults on rated local currency bonds warrant a lower rating for these bonds
as compared to the foreign currency rating.
DCR became a subsidiary of Fitch IBCA on April 12, 2000, and it is
expected that the companies will merge by late May 2000. As previously
announced, the combined analytical staffs of Fitch IBCA and DCR are working
together to harmonize the ratings and rating approach for the new company. As
part of this process, analysts from Fitch IBCA participated with analysts from
DCR as part of the joint committee that determined this ratings action.
Consequently, it is not expected that any further rating action will be taken
when a single set of ratings is issued at the merger of DCR and Fitch IBCA.
SOURCE Duff & Phelps Credit Rating Co.
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Related links:
http://www.dcrco.com
CONTACT:
Roger M. Scher, 212-908-0240,
Scher@dcrco.com, or Richard Fox, London, +44-20-7-417-4357,
Rfox@fitchibca.com, both of Duff & Phelps Credit Rating Co.
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