Fitch cuts Venezuela's PDVSA rating amid default fears

Washington (AFP) –


Credit rating agency Fitch cut Venezuelan state-owned natural gas company PDVSA's credit rating from "CC" to "C" Tuesday, as the country teeters on the brink of "highly probable" debt default.

Fitch explained the lowered rating citing announcements from both the company and the Venezuelan government that they intended to renegotiate their debt.

The agency said it also reflected missed payments on international bonds -- currently under a 30-day grace period -- and the recent lowering of Venezuela's long-term foreign currency rating, which also dropped from "CC" to "C."

Fitch said these factors made default "highly probable."

"PDVSA's credit quality continues to reflect its close linkage to the government of Venezuela as a state-owned entity, combined with absolute government control over business strategies and internal resources," the agency said in a statement.

Analysts predicted it will be difficult for Maduro's government to offer PDVSA financial aid, given both are facing difficulties.

Maduro on Thursday announced he is looking to renegotiate Venezuela's estimated $150 billion in sovereign external debt, but did not specify how this would be achieved.