S&P: Gap between sovereign and country risk widening in Venezuela

Standard & Poor's said in a report that it finds that pervasive country risk factors endemic to The Bolivarian Republic of Venezuela (BB-/stable/B sovereign credit ratings) heighten operating and financial risk to the country's business community, even as the credit quality of the sovereign itself has improved.

The article, "Minding The Gap As Sovereign And Country Risk Diverge In Venezuela," reveals that while the ratings on some government-owned entities could benefit from the higher credit quality of their sole shareholder, the likelihood of any upgrades is tempered by governance risk and by the potential for the entities to be burdened by policy objectives of the central government, the agency said.

"Unpredictable policy initiatives and regulatory actions depress domestic and foreign direct investment, which is needed to support stronger and more diversified growth," said S&P credit analyst Richard Francis.

"In the gradual shift toward a more authoritarian bureaucracy, decisions and actions affecting businesses have become less predictable and resulted in increased bureaucratic interference."

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