UPDATE: Venezuela Outlook to Negative from Stable by S&P
Tweet
Share
E-mail
(Updated - April 19, 2013 3:18 PM EDT)
Standard & Poor's Ratings Services revised to negative from stable the outlook on its long-term foreign currency sovereign credit ratings on the Bolivarian Republic of Venezuela. At the same time, we affirmed our 'B+/B' long- and short-term foreign and local currency sovereign credit ratings on Venezuela. Our 'B+' transfer & convertibility (T&C) assessment is unchanged.
"The outlook revision reflects growing political uncertainty that could weaken the implementation of economic policies and possibly undermine governability following the presidential elections of April 14," said Standard & Poor's credit analyst Sebastian Briozzo. According to official results, incumbent President Nicolas Maduro of the Partido Socialista Unido de Venezuela narrowly defeated his opposition challenger, Henrique Capriles, by slightly more than 200,000 votes. The opposition has challenged the official results and sought a full recount. The country's electoral council has agreed to undertake an audit.
"The election results add to the already high level of unpredictability that characterizes Venezuela's economic policy and its legal and policy framework, which constrain the sovereign credit rating," said Mr. Briozzo. "The country's vast oil and gas reserves, the government's relatively low debt burden, and its net external asset position continue to support the rating."
The negative outlook signals the possibility that a politically weakened president and administration may pursue less pragmatic, more interventionist policies that increase imbalances in the economy and result in greater instability. We could lower the rating by one notch under such a scenario.
In a more extreme and remote scenario, the recent political problems could create sufficient disorder to disrupt the administration's ability to govern and, thereby, impair its ability to service its debt. We could lower the rating by more than one notch under such a scenario.
Steps to defuse the heightened tensions in Venezuela's political environment would reduce the risks of eroding governability and of greater volatility in economic policies. That, along with pragmatic economic policies to contain economic imbalances, could lead us to revise the outlook to stable.
Standard & Poor's Ratings Services revised to negative from stable the outlook on its long-term foreign currency sovereign credit ratings on the Bolivarian Republic of Venezuela. At the same time, we affirmed our 'B+/B' long- and short-term foreign and local currency sovereign credit ratings on Venezuela. Our 'B+' transfer & convertibility (T&C) assessment is unchanged.
"The outlook revision reflects growing political uncertainty that could weaken the implementation of economic policies and possibly undermine governability following the presidential elections of April 14," said Standard & Poor's credit analyst Sebastian Briozzo. According to official results, incumbent President Nicolas Maduro of the Partido Socialista Unido de Venezuela narrowly defeated his opposition challenger, Henrique Capriles, by slightly more than 200,000 votes. The opposition has challenged the official results and sought a full recount. The country's electoral council has agreed to undertake an audit.
"The election results add to the already high level of unpredictability that characterizes Venezuela's economic policy and its legal and policy framework, which constrain the sovereign credit rating," said Mr. Briozzo. "The country's vast oil and gas reserves, the government's relatively low debt burden, and its net external asset position continue to support the rating."
The negative outlook signals the possibility that a politically weakened president and administration may pursue less pragmatic, more interventionist policies that increase imbalances in the economy and result in greater instability. We could lower the rating by one notch under such a scenario.
In a more extreme and remote scenario, the recent political problems could create sufficient disorder to disrupt the administration's ability to govern and, thereby, impair its ability to service its debt. We could lower the rating by more than one notch under such a scenario.
Steps to defuse the heightened tensions in Venezuela's political environment would reduce the risks of eroding governability and of greater volatility in economic policies. That, along with pragmatic economic policies to contain economic imbalances, could lead us to revise the outlook to stable.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- FOMC minutes from July 28-29th meeting
- Barclays Starts Bitdeer Technologies Group (BTDR) at Overweight
- Amer Sports Inc. (AS) PT Lowered to $42 at Truist, but 'Momentum continues to surge in a tough macro'
Create E-mail Alert Related Categories
Credit RatingsRelated Entities
Standard & Poor'sSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
