Tag Archives: Fitch Ratings

Jul
19
2013
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In Case You Missed It…Articles Roundup Week of 7/19/13

capriles denuncia en 16083903 In Case You Missed It…Articles Roundup Week of 7/19/13

Courtesy of: EFE

This week: Henrique Capriles arrives in Chile to meet with President Sebastián Piñera, as well as other ruling party leaders and the Venezuelan community in Santiago; Human Rights Watch says Venezuela should guarantee the right of free speech of its own citizens before offering to defend Edward Snowden; U.S. Secretary of State John Kerry tells Venezuelan Foreign Minister Elías Jaua that Washington will halt all refined-oil sales if Snowden takes refuge in Venezuela; and Nicolás Maduro fumes after U.S. envoy to the United Nations criticizes Venezuela’s regime as “repressive.” Annual inflation reaches 39.6 percent, far exceeding the government’s stated goal of 14 – 16 percent; purchasing power declines 10 percent as a result of rising inflation; and the Venezuelan government recognizes scarcity of dollars as a big problem, but only takes tepid steps to solve it. The devaluation of the bolívar is complete with the Central Bank’s auction of dollars, doubling the exchange rate; a new Fitch Ratings report confirms that the country’s foreign exchange policy continues to face challenges; and Maduro marries his longtime companion and prominent PSUV figure, Cilia Flores.

Capriles arrives in Chile; confirms appointment with Sebastián Piñera, El Universal

Venezuelan opposition leader Henrique Capriles arrived in Chile on Wednesday in the first leg of a tour that will also take him to Peru. He confirmed that he will meet with President Sebastián Piñera, without specifying the time or place. “It is not important whether we will talk at La Moneda Palace, the seat of the Chilean government, or elsewhere,” Capriles told reporters at the airport of Santiago.

Human Rights Watch: Snowden should steer clear of Venezuela, Salon

If US whistleblower Edward Snowden takes refuge in Venezuela he might quickly wish he hadn’t. At least that’s the verdict of Chilean lawyer Jose Miguel Vivanco, who heads the Americas division of Human Rights Watch, the New York-based advocacy group.

Kerry said to give stern warning to Caracas on Snowden, UPI

Washington is reported to have warned Caracas it would be barred from entering any NATO airspace if it flies U.S. secrets leaker Edward Snowden to Venezuela. Secretary of State John Kerry, who Spanish newspaper ABC said made the warning to Venezuelan Foreign Minister Elias Jaua, also said Washington would halt all sales of vital gasoline and other refined-oil products to Venezuela if Snowden gets refuge in that country, the newspaper said.

Venezuela slams U.S. over ‘repressive regimes’ remarks, Reuters

Venezuelan President Nicolas Maduro demanded the United States apologize on Thursday after the Obama administration’s nominee for envoy to the United Nations said there was a crackdown on civil society in the South American country.

Venezuela Inflation at 39.60%, Latin American Herald Tribune

The inflation rate for the month of June was at 4.7%, lower than that of May’s 6.1%, according to the Venezuelan Central Bank. This brings the rate of inflation for just the first half of 2013 to a total of 25% and the annualized rate at 39.6% — far from the Venezuelan government’s stated goal of keeping it between 14% and 16%.

Purchasing power down 10% due to inflation, El Universal

Venezuela’s minimum wage was increased by 20% on May 1 to USD 390, yet soaring prices have made such increase lose strength rapidly. In May-June this year, inflation shot up reducing purchasing power by 10%.Data from the Central Bank of Venezuela (BCV) indicates that since May 1, prices have swollen 17% in the case of food, 11.2% in transport, and 9% in clothing.

Venezuela: let there be dollars, Financial Times

The Venezuelan toilet paper shortage story says a lot about economic management in a country where the greenback fetches five times its official value on the parallel market. While Venezuelans have struggled to get their hands on everything from loo roll to toothpaste, authorities have been in denial about the grinding liquidity crunch that makes ordinary life – and business life – a daily struggle.

BCV sells US dollars at VEB 10.9 and VEB 11.7 in Sicad auction, El Universal

Devaluation of the bolivar was completed upon the auction sale of US dollars conducted by the Central Bank of Venezuela (BCV) through the Ancillary Foreign Currency Administration System (Sicad), where the exchange rate doubled that of VEB 5.30 per US dollar at its predecessor, the Transaction System for Foreign Currency Denominated Securities (Sitme).

Fitch: Venezuela’s Foreign Exchange Policy Faces Challenges, Reuters

Venezuela’s foreign exchange (FX) policy adjustments in 2013 could reduce fiscal imbalances and limit the need of continued external debt issuance. However, the room to stabilize creditworthiness could be constrained by weaker external buffers, limited upside for oil revenues and non-debt capital inflows, a rapidly decelerating economy, and political changes, according to a new Fitch Ratings report.

Venezuelan President Marries Longtime Companion, Wall Street Journal

Venezuela’s President Nicolás Maduro said on Tuesday that he had married his longtime companion, Cilia Flores, a prominent ruling party figure. Mr. Maduro, speaking during a cabinet meeting broadcast on state television, said the small ceremony was held Monday and was conducted by Jorge Rodríguez, a Caracas-area mayor.

 
Apr
4
2012
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ICYMI: Venezuela Credit Rating May Be Cut by Fitch on Oil Reliance

Bloomberg
April 4, 2012
By Daniel Cancel

Venezuela’s credit rating may be cut by Fitch Ratings, which cited higher spending, increased dependence on oil and the use of off-budget funds in reducing the outlook for the country to negative from stable.

A jump in government outlays may push the central government budget deficit to 6.8 percent of gross domestic product this year and make the South American country more vulnerable to a slump in commodities, Fitch director Erich Arispe said today in a statement. A drop in crude or gold prices could negatively affect the rating, he wrote.

Venezuelan President Hugo Chavez, who is receiving radiation therapy to treat cancer in Cuba and plans to seek re- election in October, has diverted at least $80 billion to off- budget development fund Fonden since it was created in 2005 and accelerated borrowing in U.S. dollars amid record crude prices. The 57-year-old also decreed a change to the public finance law on March 29 that allows him to issue debt beyond the budgeted amount without seeking congressional approval.

“A markedly expansionary fiscal policy and the transfer of the country’s oil-windfall to opaque off-budget funds have weakened Venezuela‘s external and fiscal credit metrics as well as increased its dependence on high oil prices,” Arispe said in the statement.

The yield on Venezuela’s 9.25 percent benchmark bonds due in 2027 rose 15 basis points, or 0.15 percentage points, to 10.98 percent today at 11:10 a.m. in Caracas, according to data compiled by Bloomberg. The bond’s price fell 0.99 cent to 87.25 cents on the dollar.

Rating Affirmed

Fitch affirmed it’s B+ credit rating for Venezuela, which is four levels below investment grade and in line with the ratings of Bolivia, Ghana, Kenya, Vietnam and Zambia.

Fitch also changed its outlook for Venezuelan state oil company Petroleos de Venezuela SA and government-run utility company Electricidad de Caracas to negative, according to a separate statement.

PDVSA, as the Caracas-based oil company is known, has about $19.5 billion of dollar bonds outstanding while the state utility has about $663 million of bonds due in 2014 and 2018, Fitch said in the statement.

Venezuela depends on oil for 95 percent of export revenue and about 66.7 percent of its international reserves were in gold at the end of 2011, Fitch said.

Borrowing Costs

While Venezuela’s debt-to-GDP ratio of 25.2 percent is lower than peers, interest payments are rising as the country sells more bonds at high borrowing costs, Fitch said. Venezuela sold $7.2 billion of bonds in 2011.

The extra yield that investors demand to hold Venezuelan debt instead of U.S. Treasuries widened 11 basis points to 943, according to JPMorgan Chase & Co.’s EMBI Global index.

Recent polls show Chavez maintains a lead on opposition candidate Henrique Capriles Radonski six months before the Oct. 7 election. Chavez has ruled Venezuela since 1999.

“The risk for political and social instability remains present due to the high concentration of power in the hands of the president, weak institutional framework and the high degree of political polarization in Venezuela,” Fitch wrote. “The likelihood of a close presidential election and concerns about President Chavez’s health add further uncertainty to the political environment.”

To contact the reporter on this story: Daniel Cancel in Caracas at [email protected]

To contact the editor responsible for this story: David Papadopoulos at [email protected]

To view this article on Bloomberg, please click here.