Credit firm lowers Citgo rating

Web posted Saturday, February 8, 2003 4:33 a.m. CT www.amarillonet.com

TULSA, Okla. (AP) - Fallout from Venezuela's two-month oil strike prompted one agency Friday to downgrade Citgo Petroleum's credit rating from speculative to highly speculative.

Fitch Ratings cited the strike's impact on the financial flexibility of the Tulsa-based company and its parent in cutting Citgo's senior unsecured debt rating from BB- to B+.

The company also assigned a B+ rating to Citgo's proposed $550 million bond offering.

Citgo is owned by PDV America, a subsidiary of the South American country's state-owned oil company, Petroleos de Venezuela.

The agency said the downgrade reflects Citgo's tight liquidity as well as the potential use of proceeds from the proposed bond offering to help pay PDV America's maturing debt in August.

Fitch is concerned about the ability and willingness of Citgo's parent to pay the maturity of the notes in the absence of a return to normal oil operations.

The strike ended earlier this week in every industry but oil. The disruptions in oil exports from Venezuela forced Citgo to buy oil on the more expensive spot market.