Moody’s rates PDVSA notes Caa3

Moody's Investors Service said it assigned a Caa3 rating to PDVSA (Petroleos de Venezuela SA)'s $3.4 billion 8½% senior secured notes due 2020.

The outlook is negative.

The company on Oct. 28 exchanged its 5¼% senior notes due 2017 and 8½% senior notes due 2017 for 8½% $3.37 billion senior secured notes due in October 2020.

The 2020 notes will be amortized in four equal installments starting in 2017, Moody’s said.

The 2020 notes are secured by a first-priority security interest on 50.1% of the capital stock of Citgo Holding, Inc. and are unconditionally and irrevocably guaranteed by Petroleos, the agency said.

The ratings consider the company's underlying baseline credit assessments, which represent the issuer's intrinsic credit risks regardless of government support and assumptions about the willingness and the ability of its government to provide extraordinary support in a distressed situation, Moody’s said.

The ratings also reflect the inextricable relationship between Petroleos and the government of Venezuela, as well as the company's status as a driver of Venezuela's economy, the agency said.

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