Moody's downgrades Venezuelan oil projects

Moody's Investors Service said it downgraded the ratings of Corpoguanipa, SA, Hamaca Holding LLC, Petrozuata Finance Inc. and Sincrudos de Oriente Sincor, CA to B2 from B1 and placed the ratings under review for further downgrade.

The downgrades follow the announcement of the impending assumption of majority ownership of the projects by Petroleos de Venezuela, the Venezuelan state-owned oil company. The projects are integrated extra heavy crude oil projects located in Venezuela's Orinoco belt. Until now, all three projects have been majority owned by foreign oil companies.

The agency said the downgrades also reflect concerns that even if the projects continue to service their debt in a timely manner, there is significantly increased refinancing risk. Two of the projects face significant bullet maturities that will require refinancing as early as 2009, and under the current circumstances, it is uncertain whether and under what terms the projects will be able to successfully refinance their debt.

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