Moody’s Downgrades Venezuela After Oil Prices Slide

Moody’s Investors Service on Tuesday downgraded its debt rating for Venezuela, citing an increased likelihood of a default due to lower oil prices.

Moody’s cut the country’s rating to Caa3 from Caa1, with the outlook stable.

“In the event of a default, Moody’s believes that the loss given default (LGD) is likely to be greater than 50 percent,” the agency said in a statement.

The ratings agency said it believes Venezuela is unlikely to implement forceful policy changes needed to curb macroeconomic distortions in the market.

Venezuela faces key deadlines for billions of dollars in foreign debt in 2015 and is considered among one of the most vulnerable oil producers in the 12-member OPEC cartel. Most analysts estimate a fiscal break-even price of some $110 a barrel. U.S. oil and Brent futures were trading in the mid-$40s a barrel in early trading Tuesday.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza