<a href=reuters.com>Reuters, Fri May 9, 2003 04:33 PM ET (The following statement was released by the rating agency)

NEW YORK, May 9 - Standard & Poor's Ratings Services said today that it raised its corporate credit ratings on PDV America Inc. and its wholly owned subsidiary CITGO Petroleum Corp. to 'BB-' from 'B+', and removed the ratings from CreditWatch with developing implications. In addition, Standard & Poor's upgraded by one notch PDV America's senior unsecured debt rating and CITGO's senior unsecured debt and secured term loan ratings.

The upgrades reflect the improved liquidity of PDV America and CITGO. PDV America and CITGO now have sufficient liquidity to meet financial obligations for 2003 without relying on material external financing or triggering a violation of financial covenants.

The ratings were originally placed on CreditWatch Feb. 6, 2003. The outlook is stable.

"During the past year, CITGO's financial condition has been buffeted by a severe downturn in refining margins and political instability in Venezuela that reduced crude shipments to its CITGO subsidiary. This combination of events caused CITGO's trade credit terms to worsen sufficiently to strain CITGO's liquidity and significantly increased the cost of accessing credit markets," said Standard & Poor's credit analyst Bruce Schwartz.

"However, in recent months, refining margins have rebounded, crude shipments from Venezuela have normalized, and the company has successfully raised external financing, bringing total cash and available borrowing capacity to about $1.2 billion. As such, CITGO's fiscal crisis has abated," added Mr. Schwartz.

Standard & Poor's also said that CITGO/PDV America still faces serious challenges over the intermediate term, most significantly a likely decline in refining margins later in 2003 and funding about $1.1 billion (through 2006) of required investments to meet new clean fuels standards.

PDV America is the holding company for CITGO, a large U.S. refining and marketing company. PDV America and its subsidiaries are an indirect, wholly owned subsidiary of Petroleos de Venezuela S.A., which is the national oil company of the Republic of Venezuela. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.

Fri May 9, 2003 03:13 PM ET CARACAS, Venezuela, May 9 (<a href=reuters.com>Reuters) - Venezuela's leading telephone company CANTV TDVd.CR VNT.N said Friday it would hold talks with its main debt holders about the possibility of extending the maturity of some of its debt due in early 2004.

"We are looking into all the options we have regarding the amortization of ... $100 million of Yankee bonds that are coming due in January of 2004," CANTV's Vice President of Finances Armando Yanes told shareholders during a conference call.

But CANTV was not considering the rollover of all of the $100 million due in January, Yanes added.

The company reported a 74 percent fall in net profits for the first quarter of 2003 compared with a year ago, due to the ongoing recession in Venezuela, the world's No. 5 oil exporter.

CANTV, whose main shareholder is U.S. telephone company Verizon Communications Inc. VZ.N , last week issued guidance predicting a net loss of $73 million to $195 million for 2003, in contrast to profits of $44 million last year.

The firm blamed the projected losses on an anticipated fall in telephone use due to an expected 15 percent contraction in Venezuela's economy this year. The oil-reliant economy contracted 8.9 percent in 2002.

President Hugo Chavez's government introduced strict currency controls in late January to stem massive capital flight following a crippling oil strike by foes of Chavez in December and January. It fixed the local bolivar currency's exchange rate at 1,600 bolivars per U.S. dollar.

Companies have complained bitterly about the resulting dollar drought, and CANTV in April announced it was not immediately able to pay ordinary dividends in dollars for holders of its American Depository Receipts (ADR).

CANTV said it would continue working closely with the state exchange control board CADIVI to draw up mechanisms that would allow the company to pay the dividends in dollars and pay the Yankee bonds when they fall due.

Shares in CANTV climbed 3.23 percent in the local market Friday to 2,400 bolivars per share, while its ADRs, which each represent seven shares, climbed 1.57 percent to $10.37.

Caracas, May 9 (<a href=quote.bloomberg.com>Bloomberg) -- Venezuela's economy probably had its biggest contraction ever in the first quarter as an unsuccessful strike to oust President Hugo Chavez crippled oil production and consumer spending.

Gross domestic product probably shrank 29 percent in the first quarter from the same period a year ago, according the median forecast of seven economists in a Bloomberg survey. That loss almost matches oil's one-third contribution to the Venezuelan economy. The previous worst contraction was 17 percent in the fourth quarter of 2002.

``Chavez is still popular with a lot of the poor, but this economic depression is really going to test that popularity,'' said Benito Berber, an analyst with research firm IDEAglobal in New York.

The shrinking economy may accomplish what Chavez's opponents failed to get with the two-month strike: a new president. Chavez may face a binding referendum on his mandate later this year, which if he loses would lead to new elections. The strike, which cost the economy $7.4 billion, helped drive unemployment to 21 percent, and polls show about 60 percent of Venezuelans want Chavez to leave.

The economy has contracted two of the four years the former army lieutenant colonel has been in office.

The country's oil industry, whose production and revenue usually account for about 30 percent of GDP, fell 45 percent in the January-March period, according to Alejandro Grisanti, an analyst at Santander Investment in Caracas.

Oil Production

Oil production, which fell to 150,000 barrels a day in the first week of January, rose to 3 million barrels a day by the end of March, or back to pre-strike levels, according to the government. Oil output averaged 1.8 million barrels a day during the first three months of the year, down about 35 percent from the year before, the government said.

The strike and concern that a war in Iraq would cut production from that country boosted crude oil prices to $34.67 a barrel on March 12 from $23.63 on Nov. 13. Prices fell to $26.98 yesterday.

``The productive apparatus has been hit by everything that has happened recently -- the strike, the social and political conflict, the uncertainty, the lack of currency,'' said Domingo Maza, one of seven central bank directors.

Chavez restricted foreign currency trading in January to bolster international reserves depleted by falling confidence in the bolivar.

Since then the government has authorized the sale of only $105 million, compared with daily sales of about $60 million before the restrictions. The lack of dollars has stifled production in a country that imports 60 percent of consumer goods and where many companies rely on foreign parts and raw material to operate.

The government fixed the exchange rate at 1,600 bolivars a dollar in February. Companies and individuals scrambling for dollars have pushed the unofficial rate to about 2,200 bolivars.

Provisions

It's not just that we're running out of food, there are no car parts, tools, chemicals for companies, fertilizers for farmers,'' said Albis Munoz, president of Fedecamaras, the largest business association. When you attack private business, when you cut off dollars, you're cutting off the Venezuelan people.''

The government says it will import essential goods to avoid shortages.

Chavez's relations with many of the country's business people have been tense since he decreed 49 laws in October 2001 that included one allowing the government to confiscate private property.

There must be an agreement between the government and private sector over resources and the division of labor,'' Maza said. Without it, there's no possibility of overcoming the economic crisis we're in.''

Inflation quickened to 31 percent last year, a five-year high, from 12 percent in 2001.

The following chart provides a breakdown of forecasts for first quarter and 2003 GDP growth by firm:

T* Firm First Quarter 2003 IDEAglobal -19 -9.1 J.P. Morgan -24 -15 Santander Investment -35.2 -9.3 Banco Mercantil -27.1 -11.3 Deutsche Bank -38.5 -15.3 UBS Warburg -29 -15.5 BBVA -36 -12.3 Bear Sterns -15 Morgan Stanley -16.9 Veneconomy -16.8 IMF -17

Median -29 -15 T* Last Updated: May 9, 2003 10:10 EDT

Caracas, May 9 (<a href=quote.bloomberg.com>Bloomberg) -- Venezuela's economy probably had its biggest contraction ever in the first quarter as an unsuccessful strike to oust President Hugo Chavez crippled oil production and consumer spending.

Gross domestic product probably shrank 29 percent in the first quarter from the same period a year ago, according the median forecast of seven economists in a Bloomberg survey. That loss almost matches oil's one-third contribution to the Venezuelan economy. The previous worst contraction was 17 percent in the fourth quarter of 2002.

``Chavez is still popular with a lot of the poor, but this economic depression is really going to test that popularity,'' said Benito Berber, an analyst with research firm IDEAglobal in New York.

The shrinking economy may accomplish what Chavez's opponents failed to get with the two-month strike: a new president. Chavez could face a binding referendum on his mandate later this year, which if he loses would lead to new elections. The strike, which cost the economy $7.4 billion, helped drive unemployment to 21 percent, and polls show about 60 percent of Venezuelans want Chavez to leave.

The economy has contracted two of the four years the former army lieutenant colonel has been in office.

The country's oil industry, which usually accounts for about 30 percent of GDP, fell 45 percent in the January-March period, according to Alejandro Grisanti, an analyst at Santander Investment in Caracas.

Oil Production

Oil production, which fell to 150,000 barrels a day in the first week of January, rose to 3 million barrels a day by the end of March, according to the government. Oil output averaged 1.8 million barrels a day during the first three months of the year, down about 35 percent from the year before, the government said.

The strike and concerns that a war in Iraq would cut production from that country boosted crude oil prices to $34.67 a barrel on March 12 from $23.63 on Nov. 13. Prices fell to $27 yesterday.

``The productive apparatus has been hit by everything that has happened recently -- the strike, the social and political conflict, the uncertainty, the lack of currency,'' said Domingo Maza, one of seven central bank directors.

Chavez restricted foreign currency trading in January to bolster international reserves depleted by falling confidence in the bolivar.

Since then the government has authorized the sale of only $105 million, compared with daily sales of about $60 million a day before the restrictions. The lack of dollars has stifled production in a country that imports 60 percent of consumer goods and where many companies rely on foreign parts and raw material to operate.

Provisions

It's not just that we're running out of food, there are no car parts, tools, chemicals for companies, fertilizers for farmers,'' said Albis Munoz, president of Fedecamaras, the largest business association. When you attack private business, when you cut off dollars, you're cutting off the Venezuelan people.''

The government says it will import essential goods to avoid shortages.

Chavez's relations with many of the country's business people has been tense since he decreed 49 laws in October 2001 that included one allowing the government to confiscate private property.

There must be an agreement between the government and private sector over resources and the division of labor,'' Maza said. Without it, there's no possibility of overcoming the economic crisis we're in.

The following chart provides a breakdown of forecasts for first quarter and 2003 GDP growth by firm:

T* Firm First Quarter 2003 IDEAglobal -19 -9.1 J.P. Morgan -24 -15 Santander Investment -35.2 -9.3 Banco Mercantil -27.1 -11.3 Deutsche Bank -38.5 -15.3 UBS Warburg -29 -15.5 BBVA -36 -12.3 Bear Sterns -15 Morgan Stanley -16.9 Veneconomy -16.8 IMF -17

Median -29 -15 T* Last Updated: May 9, 2003 06:27 EDT

<a href=www.vheadline.com>venezuela's Electronic news Posted: Friday, May 09, 2003 By: VenAmCham

Venezuelan American Chamber of Commerce (VenAmCham) chief economist Jose Gregorio Pineda says the pressure on price behavior now being felt is strong enough to project an inflation rate exceeding 50%.

"Price behavior has been affected by the price and exchange controls, plus the deep plunge of purchasing power among the Venezuelan population ... inflation has been somewhat erratic in the last few months, through the overall trend has been upward, even if a little less intensively since February's surge."

Pineda points out that the variation of the Consumer Price Index (CPI) for the Caracas Metropolitan Area (CPI-CMA) was 0.9 points in April, higher than the previous month's 1.7% ... that put the cumulative variation so far this year at 11.2%.

The VenAmCham economist also said that a breakdown shows accelerating price variations for four categories of the 13 that comprise the CPI, the most important of which is Food & Non-Alcoholic Beverages, which rose by 1.6% (5.3 points more than in March). Transportation prices increased by 2.4% (compared to a 0.8% decline in March), due to higher vehicle prices, taxi fares, and air fares.

"The prices of uncontrolled goods and services rose 2.1% in April, less than in the previous months. The conjunction of such factors as short supplies of certain products and contraction of demand brought about a slowdown in price variations in April. The variation of housing rentals increased from 1% to 1.4%, however."

Among the categories in which price variations were smaller in April were: Recreation & Culture (from 6.9% in March to 0.5%), Alcoholic Beverages & Tobacco (from 8.6% to 4.7%), Household Equipment (from 5.3% to 3%), and Communications (from 3.3% to 1.2%). The last category reflected a residential telephone rate increase offset by loser prices for cellular telephones and stable prices for cellular phone and Internet use.