With the return to near-normal levels of national oil production, Moody’s Investors Service has changed its outlook to stable from developing for Venezuela ‘s Caa1 foreign-currency country ceiling for bonds and notes, as well as for the Caa1 foreign-currency country ceiling for bank deposits. The outlook on the Caa1 local currency government bond rating was also changed to stable from developing.
Moody’s says the stable outlook is predicated on the almost-complete return to the level of oil production that was experienced at PDVSA, the state-owned oil company, prior to the recent national oil workers strike. The end of the strike, when combined with the initiation of widespread capital controls, has meant that the central government is in a stronger political position than was true prior to the December strike.
The outlook reflects a combination of the still-relatively-low public-sector foreign currency debt ratios and the still-relatively-large international reserves. International reserves have increased following the imposition of capital controls.
The stable outlook for Venezuela ‘s ratings incorporates the deep and potentially long-lasting damage to the country’s main source of foreign currency earnings as a result of the ongoing restructuring of PDVSA as well as the domestic opposition to such restructuring efforts.
While the authorities continue to make significant efforts to service the public sector debt on a timely basis, Moody’s noted that given present economic and political conditions in Venezuela , such efforts are not assured on an on-going basis.