PDVSA Downgraded by S&P on ‘Distressed’ Bond Swap Proposal

S&P Global Ratings downgraded Venezuela’s state oil company and said if a planned voluntary bond swap is carried through it would be “tantamount to default.”

The ratings agency downgraded Petroleos de Venezuela SA to CC from CCC with a negative outlook reflecting the potential for another downgrade if the swap is completed, S&P analysts led by Marcela Duenas wrote in a statement. PDVSA, as the company is known, is offering to swap $7 billion of bonds maturing in April and November next year for new 8.5 percent notes with payments staggered over the next four years. The new bonds will be backed by a “first-priority lien” on a 50.1 percent stake in Citgo Holding Inc., the unit that owns its U.S. refining arm, according to the prospectus published Friday.