S&P: Venezuela in ‘ se­lec­tive de­fault’

> Rat­ings agency says grace pe­riod ex­pired on US$200 mil­lion of in­ter­est pay­ments

The Sun (Malaysia) - - SUNBIZ -

WASHINGTON: Stan­dard & Poor’s de­clared Venezuela in “se­lec­tive de­fault” on Mon­day, af­ter it failed to make US$200 mil­lion (RM837.6 mil­lion) in pay­ments on its global bonds, be­com­ing the first credit rat­ings agency to do so.

The agency said it acted af­ter a 30day grace pe­riod had passed on pay­ments on two bonds.

“We have low­ered two is­sue rat­ings to ‘D’ (de­fault), and we low­ered the long-term for­eign cur­rency sov­er­eign credit rat­ing to ‘SD’ (se­lec­tive de­fault),” the agency said.

S&P’s ver­dict came af­ter the Venezue­lan gov­ern­ment met international cred­i­tors in Cara­cas but of­fered no con­crete plan for re­struc­tur­ing its US$150 bil­lion debt.

Par­tic­i­pants at the meet­ing told AFP that of­fi­cials said the gov­ern­ment in­tended to form work­ing groups to eval­u­ate short- and mid-term debt rene­go­ti­a­tion pro­pos­als, but gave no specifics.

“We would very likely consider any Venezue­lan re­struc­tur­ing to be a dis­tressed debt ex­change and equiv­a­lent to de­fault given the highly con­strained ex­ter­nal liq­uid­ity,” S&P said.

“In ad­di­tion, in our opin­ion, US sanc­tions on Venezuela and gov­ern­ment mem­bers will most likely re­sult in a long and dif­fi­cult ne­go­ti­a­tion with bond­hold­ers,” it said.

Be­sides the two bond pay­ments it has de­faulted on, Venezuela is over­due on four other debt pay­ments but they were still within the 30-day grace pe­riod, S&P said.

Rat­ings on those bonds also will be low­ered to “D”, of de­fault, if not paid on time, it said.

The un­paid obli­ga­tions to­tal US$420 mil­lion, the agency said. – AFP

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.