S&P lifts Petroleos de Venezuela

S&P said it raised the corporate credit rating on PDVSA (Petroleos de Venezuela SA) to CCC- from SD (selective default).

The agency also said it raised the ratings on the company's 5¼% senior unsecured notes due April 2017 to CCC- from D, along with the rating on its 8½% senior unsecured notes due November 2017 to CCC- from D.

S&P also said it lowered the rating on the company's senior unsecured debt to CCC- from CCC.

The outlook is negative.

The upgrades follow the exchange of the company’s outstanding 5¼% and 8½% senior unsecured notes.

The exchange extends the maturity date of the company's debt until 2020, which improved its financial flexibility, S&P said.

However, Petroleos de Venezuela still has amortization of about $1.1 billion in November 2016 on its 5¼% senior unsecured notes and amortization of $2 billion in April 2017, the agency said. An exchange on these notes is likely, S&P said.

The ratings reflect an expectation that a default, distressed exchange or redemption appears to be inevitable in the next six months unless there are unanticipated significantly favorable changes in the company's circumstances, the agency said.

The ratings also consider the government's heavy intervention and the company’s difficulty to increase production, S&P said.

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