Fitch rates Petroleos de Venezuela notes B+

Fitch Ratings said it expects to assign a B+ with a recovery rating of RR4 to Petroleos de Venezuela, SA's proposed $3 billion senior unsecured debt issuance due 2015, 2016 and 2017, as well as the proposed $3 billion bond exchange.

With the exchange, the company is offering to replace 2011 bonds with new notes due 2013.

The company expects to use the proceeds of the debt issuance to fund capital investments and for general corporate purposes.

The company's credit quality reflects its linkage to the government of Venezuela as a state-owned entity, combined with increased government control over business strategies and internal resources, Fitch said.

This underscores the close link between the company's credit profile and that of the sovereign, the agency said.

The ratings also consider the company's strong balance sheet, sizeable proven hydrocarbon reserves, strategic interests in international downstream assets, private participation in upstream operations and geographic proximity to the North American market, Fitch said.

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