KEY RATING DRIVERS
PDVSA's credit quality reflects the company's linkage to the government of
Linkage to Sovereign:
PDVSA's credit quality is inextricably linked to the Venezuelan government. It is a state-owned entity whose royalties and tax payments have historically represented more than 50% of the government's revenues, and it is of strategic importance to the economic and social policies of the country. In 2008, the government changed PDVSA's charter and mission statement to allow it to participate in industries that contribute to the country's social development, including healthcare, education, and agriculture.
Limited Transparency of Sovereign:
The Venezuelan government displays limited transparency in the administration and use of government-managed funds, and in its fiscal operations. This factor poses challenges to accurately assess the stance of fiscal policy and the full financial strength of the sovereign. As a direct by-product of being a state-owned entity, PDVSA displays similar characteristics, which reinforces the linkage of its ratings to the sovereign, and are evidenced by the extensive amount of transactions with its shareholder, government agencies and other related parties. These transactions have a significantly negative impact on PDVSA's financial position.
Strong Stand-Alone Credit Profile:
PDVSA continues to be an important player in the global energy sector. The company's competitive position is strong and supported by its sizeable reported proven hydrocarbon reserves, strategic interests in international downstream assets and private participation in upstream operations. The company also benefits from a strong, yet weakening capital structure, which is in line with many of its competitors. Over the past five years, PDVSA's total debt has increased to
Adequate Credit Metrics:
PDVSA reported an EBITDA (after royalties and social expenditure, which include most oil bartering agreements) of approximately
Large Hydrocarbon Reserves:
PDVSA's reported hydrocarbon reserves continue to rank among the largest in the world, with proven hydrocarbon reserves of 332 billion barrels of oil equivalent (boe) as of year-end 2013. Proven developed hydrocarbon reserves were approximately 20 billion boe as of
Catalysts for a downgrade include a downgrade to
Additional information is available at 'www.fitchratings.com'.
--'Corporate Rating Methodology' (
--'Parent and Subsidiary Rating Linkage' (
Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage
Parent and Subsidiary Rating Linkage Fitch's Approach to Rating Entities within a Corporate Group Structure
Source: Fitch Ratings
Most Popular Stories
- Shia LaBeouf Plea Deal, Alcoholism Treatment
- Stop-Start Engines Save Gas, Reduce Emissions
- Ohio State Band Chief Fired After Probe
- Hispanic Leader Goes the Extra Mile
- Ricky Martin Joins 'The Voice ... Mexico'
- Ukraine Says Russians Firing Across the Border
- Jennifer Lopez, Pitbull to Perform at Fashion Rocks
- Ford Q2 Net Profit up 6 Percent
- U.S. Weighs Refugee Status for Immigrant Kids
- Morgan Stanley Ponies Up $275 Million to Settle SEC Charges