Venezuela is in default says influential ratings agency S&P Global
The Venezuelan state is technically in default, in a development which threatens to compound the unfolding economic disaster in the country, according to an influential ratings agency.
The South American nation failed to make $200m (£153m) in coupon payments for its global bonds due in 2019 and 2024 within a 30-day grace period, according to a statement issued by S&P Global late last night.
In response, the ratings agency lowered its credit rating for the nation’s debt to “SD”, indicating the state will selectively default on payments to creditors. Only full-scale default remains lower on the scale for the embattled country’s credit rating.
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Venezuela’s government has desperately tried to avoid defaulting on its payments to international creditors, but the nation appears to have finally run out of funds as an economic and humanitarian crisis ravages its people.
The International Monetary Fund predicts GDP will fall by 12 per cent in 2017, with inflation of more than 650 per cent. The crisis has prompted food and medicine shortages, while also increasing pressure on the government, led by Prime Minister Nicolas Maduro, which has become increasingly totalitarian in recent months.
Yesterday the EU imposed sanctions on the regime, banning arms sales, saying last month’s regional had been irregular. Over the weekend Maduro pointed to the sanctions as an example of the US’s attempts to topple the government.
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The ratings downgrade from S&P adds to the urgency surrounding the government’s efforts to restructure its debts. A restructuring would be equivalent to a default, S&P said.
US sanctions on the state and some members of the government also complicate the restructuring.
S&P Global judges there is a 50/50 chance of another default within the next two months, with four further payments totalling $420m already overdue.
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