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

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

For a country whose people are running short on food and medicine, Venezuela has kept a surprisingly good record of paying its debts on time.

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.

S&P Global Ratings downgraded Venezuela's foreign currency sovereign credit rating late Monday beyond junk to "selective default" after it failed to make two payments within a grace period.

The sanctions also impose a ban on USA entities buying any new Venezuelan debt issues, complicating the government's debt restructuring plan.

The US has designated vice president El Aissami himself a drug kingpin with whom US entities are barred from dealing.

President Nicolas Maduro's government had summoned creditors to Caracas for talks on Monday about restructuring Venezuela's $60 billion in outstanding bonds, but failed to present a concrete proposal.

Caracas has less than $10 billion left in hard currency reserves, but must make $1.4 billion in debt payments before year-end, and another $8 billion next year.

ISDA is already looking into whether Venezuelan state oil company PDVSA [PDVSA.UL] has triggered a credit event through a late payment of its 2017N bond. Its continued functioning is one of the few things helping the government-which has decimated its economy through mismanagement-cling to power.

Under the sanctions, no United States citizen can do business with Venezuelan individuals on the list.

Beijing and Moscow have emerged as Venezuela's most reliable sources of funding, with China owed $28 billion and Russian Federation $8 billion.

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