"Venezuela-based oil and gas company PDVSA failed to make the interest payment on its 2026 senior unsecured notes within the 30 calendar day grace period, which expired on Dec. 15, 2017," says S&P. "In line with our criteria for timeliness of payments, we're lowering the issue-level rating on the company's bonds to 'D' from 'CC'."
By Marcela Duenas
& Fabiola Ortiz
Standard & Poor's
MEXICO CITY -- S&P Global Ratings lowered its issue-level rating on Petroleos de Venezuela S.A.'s (PDVSA) senior unsecured notes due 2026 to 'D' from 'CC'.
PDVSA hasn't met the coupon payment on its 2026 notes within the 30 calendar day grace period (or the bondholders hadn't received the funds by that date), constituting an event of default under our methodology (please see "Methodology: Timeliness Of Payments: Grace Periods, Guarantees, And Use Of 'D' And 'SD' Ratings," published Oct. 24, 2013).
Since October 2017, PDVSA used its stated 30-day interest payment grace period in an effort to garner enough dollars to meet its debt maturities. Given the current sanctions on PDVSA and its already pressured liquidity position, we're 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 a default (please see "Rating Implications Of Exchange Offers And Similar Restructurings, Update," published May 12, 2009).