On Nov. 3, 2017, we lowered our long-term foreign currency credit rating on Venezuela to 'CC' from 'CCC-' and placed the rating on CreditWatch with negative implications. As a result, we're lowering our long-term corporate credit and senior unsecured debt ratings on the country's national electric utility, Corpoelec, to 'CC' from 'CCC-'," says S&P. "We also placed the ratings on Corpoelec on CreditWatch negative to mirroring those on the sovereign, reflecting the company's government-related entity (GRE) status and the potential for another downgrade if we further lower the ratings on Venezuela."
By Stephanie Alles,
& Marcelo Schwarz, CFA
MEXICO CITY -- S&P Global Ratings lowered its long-term corporate credit and senior unsecured debt ratings on Corporacion Electrica Nacional S.A. (Corpoelec) to 'CC' from 'CCC-'. We also placed the ratings on Corpoelec on CreditWatch negative.
The downgrade of Corpoelec reflects the similar action on the sovereign. We downgraded the Bolivarian Republic of Venezuela given President Nicolas Maduro's announcement of a government commission to restructure the sovereign and state-owned Petróleos de Venezuela S.A.'s (PDVSA) external debt obligations. Given the highly constrained external liquidity situation, we would very likely consider any Venezuelan restructuring to be a distressed debt exchange and equivalent to default.
We also lowered Corpoelec's stand-alone credit profile (SACP) to 'cc' from 'ccc-' based on the company's reliance on ongoing support from the sovereign to meet its financial obligations. We now believe that the possibility of a default, distressed exchange, or redemption appears to be inevitable within the next three months, absent unexpected, significantly favorable changes in the issuer's circumstances. We expect the company to continue posting operating losses and highly leveraged credit metrics.