"Venezuela-based oil and gas company PDVSA failed to make its interest payments on its 2027 senior unsecured notes within the 30-calendar-day grace period, which expired on Nov. 13, 2017," says Standard and Poor's. "In line with our criteria for timeliness of payments, we are lowering the issue ratings on these bonds to 'D' from 'CC'. At the same time we are lowering our corporate credit rating on PDVSA to 'SD' (selective default) from 'CC'."
By Marcela Duenas
& Fabiola Ortiz
S&P Global Ratings
MEXICO CITY -- S&P Global Ratings lowered its corporate credit rating on Petroleos de Venezuela S.A. (PDVSA) to 'SD' from 'CC'. At the same time, we lowered our issue-level ratings on the company's senior unsecured notes due 2027 and 2037 to 'D' from 'CC'.
We understand that PDVSA has not been able to meet the coupon payments on its 2027 and 2037 notes within its 30 calendar day grace period (or the bond holders had not received the funds by that date), constituting an event of default under our methodology.
Since October 2017, PDVSA has been using its stated 30-day interest payment grace period in an effort to garner enough U.S. dollars to meet its debt maturities. Given PDVSA's current sanctions and its already pressured liquidity position, we are uncertain about the company's ability to pay the rest of its debt maturities within the grace period.
Additionally, the president of Venezuela, Nicolas Maduro announced the formation of a government commission to restructure the sovereign's and PDVSA's external debt obligations. Given the highly constrained external liquidity situation for the sovereign and domestic entities, we would consider any restructuring of PDVSA's debt to be a distressed debt exchange and equivalent to default.