WASHINGTON: Fitch downgraded cash-strapped Venezuela to “restricted default” on Tuesday over its failure to make overdue payments on its sovereign bonds.
“Fitch Ratings has downgraded Venezuela’s Long-Term Foreign Currency Issuer Default Rating (IDR) to ‘RD’ (Restricted Default) from ‘C’ and affirmed the Long-Term Local Currency IDR at ‘CC’,” the ratings agency said in a statement said.
The downgrade “reflects the failure of bondholders to receive overdue interest payments on Venezuela’s sovereign bonds maturing Oct. 13, 2019 and Oct. 13, 2024 by the end of the 30-day grace period that ended on Nov. 13, 2017,” it said.
Venezuela is buried under an estimated $150 billion mountain of foreign debt, and the country’s population is already suffering severe food and medicine shortages because of a lack of money to import them.
It has less than $10 billion left in hard currency reserves, and yet it must make $1.4 billion in debt payments before the end of the year, and another $8 billion next year.
President Nicolas Maduro has formed a commission to restructure Venezuela’s sovereign debt and that of state oil company PDVSA.
But at its first meeting with creditors Monday in Caracas — a 25 minute, closed door session — participants said officials proposed no plan for restructuring the debt.