S&P Global Ratings removed Venezuela's long-term and short-term local currency sovereign credit ratings from CreditWatch with negative implications and affirmed them at CCC- and C, respectively.
The ratings action reflects S&P's expectation that the Venezuelan government will continue its monetary financing, which makes the timing of default on its domestic debt "less uncertain."
The ratings outlook is negative, S&P said, due to a 1-in-3 chance that Venezuela could default within the next six months on its local currency debt obligations.
As part of the ratings action, S&P affirmed Venezuela's long-term and short-term foreign currency sovereign credit ratings at selective default and default, respectively.
S&P said it could raise the foreign currency ratings to the CCC category or B- if Venezuela remedies its default on overdue foreign currency coupon payments, or if it makes progress on or completes its debt restructuring operation.
The rating agency expects Venezuela's real GDP to contract by at least 4% in 2018 after an estimated 8% decline in 2017. Inflation is projected to surpass 10,000% this year.
"Following Venezuela's recent presidential election, we continue to expect erratic economic and fiscal policies fueling the economic crisis, hyperinflation, major institutional breakdown, and severe social unrest," S&P said.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.
