S&P lowers PDVSA

S&P said it lowered its corporate credit rating on Petroleos de Venezuela SA (PDVSA) to CC from CCC. At the same time, S&P lowered its issue-level ratings on the company's $3 billion 5¼% senior unsecured notes due April 2017 and on its $4.1 billion 8½% senior unsecured notes due November 2017 to CC from CCC.

The outlook remains negative.

S&P said the downgrade follows PDVSA's announcement to exchange its existing $3 billion senior unsecured notes due April 2017 and its $4.1 billion senior unsecured notes due November 2017. Under the offer, PDVSA will exchange both 2017 senior unsecured notes at par, for approximately $7.1 billion 8½% senior secured notes due 2020.

The new notes will be guaranteed by 50.1% of equity shares in PDVSA's refining unit, Citgo Holding Inc.

“We view the transaction as a distressed exchange,” S&P said in a news release.

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