Published: Tue, November 14, 2017
World | By Paul Elliott

Standard & Poor's declares Venezuela in partial default

Standard & Poor's declares Venezuela in partial default

The decision from the ratings agency followed the government's failure to make good on coupon payments for debt maturing in 2019 and 2024 within a 30-day grace period.

Venezuelan government representatives met with creditors to try and renegotiate the debt, an initial meeting from which no agreements or concrete proposals emerged and at which the Nicolas Maduro administration informed its creditors of its limitations to pay. The government held a meeting with bondholders in Caracas on November 13 about a debt restructuring (generally considered akin to default), which is typically used to determine how much less investors will be paid than officially owed.

Bondholders had told Reuters on Monday they had not yet received payments on the 2019 and 2024 bonds but remained unconcerned by the delay, which they said was partly due to increased bank vigilance of Venezuelan transactions in the wake of USA sanctions. S&P lowered two issues' ratings to "D" (default) and said there is a one in two chance that the government.

Venezuela's total external debt, which also includes loans from countries like Russian Federation and China, is thought to be as much as $140bn.

In the past, despite the hardships its people suffer, Venezuela has used its foreign reserves to make bond payments.

Venezuela's state-run oil company PDVSA has also been declared in default by rating agencies Fitch and Moody's.

Vice-president El Aissami blamed U.S. sanctions for delays to Venezuela's debt repayments.

American investors can't participate in a restructuring anway, as sanctions prohibit them from receiving new bonds that Venezuela would issue.

PDVSA, in turn, relies on credit lines from global banks to finance oil production.

The agency said it acted after a 30-day grace period had passed on payments on two bonds. Nevertheless, his options are very limited.

Maduro is also under fire internationally for marginalizing the opposition, which controls the parliament, and stifling independent media.

Now, as USA sanctions cut deeper into what's left of the economy, it's increasingly unclear how Venezuela will support itself.

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