Venezuela defaults on sovereign debt, says S&P
By:
Simone Rensch
14 Nov 17
Venezuela has been declared in default after missing interest payments on its $60bn bond debt.
Standard & Poor, the first agency to say the country is in default, said the government had failed to make $200m payments for global bonds due in 2019 and 2024 within the grace period that expired over the weekend.
The agency cut the country’s long-term foreign currency sovereign credit rating to selective default, or SD, from CC, and downgraded the issue ratings on the bonds to D from CC.
“Our CreditWatch negative reflects our opinion that there is a one-in-two chance that Venezuela could default again within the next three months,” said S&P.
It is the first time in recent years the government has exceeded the buffer period on its bonds.
The $60bn in outstanding bonds includes debt issued by the government as well as by companies such as state oil company Petróleos de Venezuela, S.A (PDVSA).
But the country also has a total external debt thought to be as much as $140bn, including loans from countries like Russia and China.
Venezuela relies on oil exports for 95% of its foreign earnings and felt the effect of falling oil prices.
According to the BBC, the oil export earnings are just a quarter of what they were in 2012.
The government has called for renegotiation of all the country’s global debt and were due to hold a meeting on Monday with bondholders in Caracas.
No solid proposals came out of the meeting but officials said they plan to continue to service obligations.
http://www.publicfinanceinternational.org/news/2017/11/venezuela-defaults-sovereign-debt-says-sp