Fitch rates PDVSA note BB-

Fitch Ratings said it assigned a BB- rating to Petroleos de Venezuela SA's (PDVSA) proposed senior note issuance of up to $5 billion.

The outlook is stable.

Proceeds from issuance are expected to be used to fund capital expenditures and for other general corporate purposes.

PDVSA's foreign- and local-currency issuer default ratings are constrained by Fitch's BB- foreign-currency rating of the Bolivarian Republic of Venezuela and are strongly linked with the sovereign's credit profile. The agency said the linkage is based on the company's governance as a state-owned entity, the shareholder's ultimate ability to influence PDVSA's financial flexibility and utilization of PDVSA's financial resources for quasi-sovereign and fiscal, rather than productive capacity, uses.

The company's ratings are supported by credit metrics that are strong for the rating category, including an expected total debt-to-EBITDA ratio of 0.1x for 2006, Fitch said.

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