Moody's reinstates Petroleos de Venezuela ratings

Moody's Investors Service said it assigned a B1 local-currency issuer rating and a B1 foreign-currency corporate family rating to Petroleos de Venezuela. The corporate family rating is capped by Venezuela's B1 foreign-currency country ceiling.

The outlook is stable.

Moody's previously withdrew Petroleos de Venezuela's ratings in July 2006 in response to the company's de-registration with the Securities and Exchange Commission and protracted delays in the receipt of timely and transparent financial information. Since that time, Petroleos de Venezuela has produced updated audited financial statements for fiscal years 2004 and 2005 and interim unaudited results for 2006 and, in the future, plans to provide audited financial statements annually and quarterly interim statements for use by the agency.

The agency said Petroleos de Venezuela's B1 ratings incorporate a high level of default correlation between Petroleos de Venezuela and the Venezuelan government, a high degree of expected government support for Petroleos de Venezuela in the event of a stress scenario and a high degree of political risk and uncertainty stemming from the company's strategic role in supporting the government and its social spending programs.

Petroleos de Venezuela's assets and current financial position fundamentally indicate a considerably higher standalone credit risk more in line with its highly rated integrated peer group, Moody's said, adding that Petroleos de Venezuela has enormous hydrocarbon resources and a very low debt level, particularly following the redemption in 2005 of virtually all of the debt of Petroleos de Venezuela Finance Ltd.

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