Economy

S&P cuts Venezuela's sovereign debt rating to 'selective default'

S&P cuts Venezuela's sovereign debt rating to 'selective default'

Standard & Poor's declared Venezuela in "selective default" on Monday, after it failed to make $200 million in payments on its global bonds, becoming the first credit ratings agency to do so.

Venezuela's total external debt, which also includes loans from countries like Russian Federation and China, is thought to be as much as $140bn.

S&P's move came after Vice President Tareck El Aissami met with creditors in Caracas Monday, but offered no way out of the impasse. He insisted, however, the OPEC nation would continue to service its debts.

The agency said on Tuesday it didn't have high expectations for the country, assessing the chances of Venezuela defaulting again within a three-month grace period at 50 per cent, which would result in a "default" rating.

Yesterday, as nervous, mainly US, creditors met in Caracas to find out what might happen to the US$ Venezuelan sovereign bonds they own, S&P downgraded these to "soon-to-default" status.

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The agency said it acted after a 30-day grace period had passed on payments on two bonds.

Vice-president El Aissami blamed United States sanctions for delays to Venezuela's debt repayments.

The sanctions also impose a ban on U.S. entities buying any new Venezuelan debt issues, complicating the government's debt restructuring plan. And many creditors also can't negotiate with El Aissami: He, too, is sanctioned by the US Treasury, which accuses him of drug trafficking.

But Maduro remains defiant, insisting on Sunday that his country would "never" default and pointing to ongoing negotiations with China and Russian Federation.

Maduro is also under fire internationally for marginalizing the opposition, which controls the parliament, and stifling independent media.


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