S&P Sees Weakening PDVSA Metrics

S&P affirmed its BB minus rating on PDVSA and kept the outlook at stable. “The ties of ownership and economic interests between PDVSA and Venezuela are evident in the significant contribution of the oil industry to government revenues (50%) and the country’s exports (90%),” says S&P. The sharp increases in direct social spending by PDVSA and recent investments in non oil-related assets provide further support to the action, adds the agency. The stable outlook reflects S&P’s expectations that PDVSA’s financial performance will deteriorate in the next couple of years as a result of higher leverage, and that production figures will remain around 2007 levels.