Fitch cuts Venezuela rating to ‘CC’ from ‘CCC’

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NEW YORK: Ratings agency Fitch on Wednesday lowered Venezuela’s rating to “CC,” amid concerns its default risk has increased after new US financial sanctions.

US President Donald Trump on Friday imposed new sanctions on Venezuela that seek to restrict access to foreign capital. Caracas desperately needs capital as its inflow of cash has been hit by low oil prices.

Trump banned US trade in new bonds issued by the government or its cash-cow oil company PDVSA.

That could choke off access to New York debt markets and substantially raise the likelihood of Venezuela being forced into default.

Fitch said default is likelier given the new sanctions. Until now its rating for Venezuelan debt was “CCC.”

Maduro’s government — which has faced months of deadly mass protests — has been accused of hijacking state institutions and moving ever deeper into autocratic rule.

According to Fitch, Caracas reserves have decreased by $1.2 billion since the beginning of the year and are currently at $9.8 billion.

In July, SP Global Ratings warned of default risk in Venezuela, due to deteriorating economic conditions.
In October and November, Venezuela and PDVSA have to pay about $3.8 billion in debt maturities.

Separately in Washington Wednesday, the US administration condemned Venezuela’s plans to have its all-powerful new Constituent Assembly try unidentified opposition representatives for alleged treason for supporting the new US sanctions.

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