Forbes.com-Reuters, 04.22.03, 4:04 PM ET (The following statement was released by the rating agency)

NEW YORK, April 22 - Standard & Poor's Rating Services today removed its ratings on PDVSA Finance Ltd.'s US$3.3 billion and Eur200.0 million rated debt from CreditWatch, where they were placed Dec. 10, 2002 (see list).

The rating action reflects the recent improvement in the rating outlook (to stable from negative) for the Bolivarian Republic of Venezuela (CCC+/Stable/C) and Petroleos de Venezuela S.A. (PDVSA; CCC+/Stable/-). The rating action is also based on a number of recent credit developments specific to the PDVSA Finance transaction, including:

-- A significant recovery in daily oil production by PDVSA;

-- Improvements in the invoicing of exported production after a lengthy interruption;

-- A sharp increase in the amount of funds flowing through the PDVSA Finance collection account; and

-- Certification by PDVSA of its compliance with all transaction performance covenants.

Standard & Poor's met with the management of PDVSA twice in recent weeks to discuss the company's progress in recovering from the labor strikes that have negatively affected its ability to produce, export, and bill its customers since late 2002. PDVSA indicated that production has recovered to approximately 2.5 million barrels per day after having fallen sharply in the December 2002 to February 2003 period. The company is steadily working through its invoicing backlog so that it can collect payment for product that was previously shipped, but for which it was unable to bill its customers due to damage inflicted on its billing systems by striking workers. PDVSA was able to resume billing customers for current shipments beginning in March 2003. The company indicated that it has currently eliminated about half of the backlogged invoicing volume related to previous oil shipments.

As a result of the production increases and improved billing, cash flowing through the PDVSA Finance collection account has increased sharply. Prior to the strikes, approximately $700 million to $1.1 billion in monthly payments flowed through the PDVSA Finance collection account, with the value of the shipments fluctuating based on the quantity of oil delivered by PDVSA to the designated customers and the price of the oil at the time of delivery. Reflecting the impact of the strike on production and export volumes, these collection flows dropped to as low as $200 million in January 2003 before recovering slightly in February to $350 million and to a much stronger level of $960 million in March. Matching the declines in production and deliveries, the debt service coverage ratio for the PDVSA Finance transaction dipped to a low of 4.50 for the month of February 2003 before recovering to 5.81 in March. The terms of the PDVSA transaction allow investors to demand an early amortization of the rated notes if the debt service coverage ratio falls below 4.0.

PDVSA Finance made its February 2003 debt service payment on the rated securities out of collection account funds and without recourse to the transaction liquidity facility. Based on the recovery in production and collections, Standard & Poor's anticipates PDVSA Finance will be able to maintain timely payment of debt service due without recourse to this fully funded liquidity facility in the near future. In addition, PDVSA has certified to Standard & Poor's that it is-and remained during the January 2003 through March 2003 period-in compliance with all PDVSA Finance transaction performance covenants. RATINGS REMOVED FROM CREDITWATCH PDVSA Finance Ltd. Class Rating

                         To             From

A 6.45% notes due 2004 B- B-/Watch Neg B 6.65% notes due 2006 B- B-/Watch Neg C 6.80% notes due 2008 B- B-/Watch Neg D 7.40% notes due 2016 B- B-/Watch Neg E 7.50% notes due 2028 B- B-/Watch Neg F 8.75% notes due 2004 B- B-/Watch Neg G 6.25% notes due 2006 B- B-/Watch Neg H 9.40% notes due 2007 B- B-/Watch Neg I 9.75% notes due 2010 B- B-/Watch Neg J 9.95% notes due 2020 B- B-/Watch Neg K 8.50% notes due 2012 B- B-/Watch Neg

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Monday, April 21, 2003 By: VenAmCham

VenAmCham's Jose Gregorio Pineda (chief economist) and Jose Gabriel Angarita (economist) write: Planning Minister Felipe Perez announced his preliminary forecasts for 2003, predicting that the Venezuelan economy will contract by 3% to 5% and inflation will come to 27%. These estimates reflect a serious underestimation in comparison with those offered by many specialists, including those of the International Monetary Fund (IMF), which forecasts a 17% plunge of economic activity and a 40% inflation rate.

The current trend in the Venezuelan economy, marked by the closing of industrial companies, a massive growth of unemployment, worsening poverty indicators, economic policies (such as price and exchange controls) detrimental to productive enterprises, barriers to foreign trade, and other distortions, could not result in anything but a deep contraction of Gross Domestic Product, to an even greater extent than in 2002.

One of the strongest explanatory factors in this highly adverse scenario for the Venezuelan economy is the systematic refusal to distribute foreign exchange to the different industries, under the exchange control system. Until the foreign exchange market is restored, even if with strict rationing, the national private will continue to be in serious difficulty, and the inevitable outcome will be higher unemployment, a deeper economic contraction, and a smaller private share in national product.

At the same time, the different components of aggregate demand contribute to the prevailing negative expectations on the course of economic activity in 2003. One of those components is a drastic decline of final household consumption, which is suffering the impact of falling real salary levels; this trend diminishes access to goods and services and undercuts well-being throughout society. Internal and external private investment have fallen considerably in recent years, and are now very skittish, given the unfavorable economic expectations and policies. Finally, public spending contracted drastically in the early months of the year (and is not expected to recover in real terms in the rest of the year) due to the fiscal crisis.

The only way to reverse the economic failure toward which we are moving, since political and social conflict have been partially limited, is a radical change of direction for economic policy. Venezuela needs policies that put in motion a plan for sustained economic growth based on a revival of national industry through the free operation of the external and internal markets, thereby stimulating the creation of new jobs, generating a favorable climate for investment of capital and maintaining price stability, among other policies designed to put the Venezuelan economy on the path toward sustained economic growth.

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www-tech.mit.edu By Marissa A. Cheng

“Sugar and Spice” is a new column (debuted last week as “Yummy Yummy”) that we hope will transform you, the average MIT student, into an afficionado of all things food and food-like.

The first thing I notice about my bag of $30 worth of chocolate is the aroma that literally fills the room when the bag is opened. Luckily, my backpack, which carried it back from the supermarket, smells like it too.

Unlike Hershey’s, or even Ghirardelli, which is generally the most expensive chocolate I’m willing to pay to bake with, this chocolate smells like no other chocolate I’ve ever had -- it has a warm, rich aroma that stays with you, rather than dissipating. It’s beautiful.

I am about to embark upon my quest to find out whether or not the chocolate you bake with really matters. I bought six brands of chocolate -- Baker’s semisweet and unsweetened from the United States, Callebaut unsweetened (97 percent cacao) from Belgium, Valrhona Pur Caraibe (66 percent cacao) from France, El Rey Bucare-Mijao (58-61 percent cacao) from Venezuela, Ghirardelli Bittersweet from San Francisco, and Scharffen Berger Bittersweet (70 percent cacao) from California.

The plan: make one baked and one unbaked dessert with chocolate -- chocolate mousse and molten chocolate cakes. I’ll taste it myself, as well as have other people taste, and see what I come up with.

Chocolate began as an unsweetened drink termed “food of the gods” by the Maya and the Aztecs. Though Christopher Columbus brought cocoa beans to King Ferdinand and Queen Isabella in 1492, chocolate didn’t catch on until it was introduced to Spain as both a drink (now with sugar and vanilla added to it) and an opportunity for a lot of money.

Chocolate was so popular in Spain that Pope Pius V, in 1569, declared that drinking chocolate on Fridays wouldn’t break the fast. In Germany, chocolate became so popular that a permit was required in order to buy it or eat it.

Chocolate is a mix of cocoa beans, cocoa butter, sugar, and vanilla. Milk chocolate includes condensed milk as well, and white chocolate contains cocoa butter, but no cocoa beans. Cocoa trees grow in tropical regions in South America and Africa, and yield football-shaped seed pods about the size of a lemon. After being harvested, they are fermented and dried, then bought by chocolate manufacturers. At the factory, the beans are cleaned, roasted to develop their flavor further, and have their outer shells removed. The remaining part of the bean, called the nib, is blended with other nibs according to the manufacturer’s secret recipe, and then crushed into a paste called chocolate liquor (though it contains no alcohol). Chocolate liquor can be poured off into molds and cooled as unsweetened chocolate, have cocoa butter and sugar added to it to make chocolate, or have most of the cocoa butter pressed out to produce cocoa.

Back to the tasting. After finding that it is somewhat trying to make mousse six times in a row on a Saturday morning at 7:30 a.m., I am finally through at 11 a.m. I’m kind of miffed that it took that long. And I still have the molten chocolate cakes to go.

The long and short of it is that I put most but not all possible care into the molten chocolate cakes. Some are a bit soupy in the middle (not baked long enough) and some are too cakey (baked too long). I hope it won’t be too noticeable. It takes a long time to chop chocolate, so by now it’s 2 p.m., time for people to start tasting what I’ve made as I think guiltily about the problem set and the 12-page paper due Monday.

Each of my eight-person tasting team (including me) samples the mousses and cakes and ranks them by their numbers. Nobody really liked El Rey at all -- it placed in the top three of a taster’s preferences just once, with a rather off flavor that was reminiscent of bad coffee. Scharffen Berger was also a no go, with a weak, underdeveloped taste. The Valrhona incited a love-it-or-hate-it phenomenon, which was especially apparent with the mousse.

Not surprisingly, given the size of the testing pool, results were fairly scattered, but it was clear that the most-liked chocolate for the mousse was a tie between the Callebaut and the Ghirardelli. More than one person termed the Callebaut mousse as tasting “very different,” and in my opinion, it had the richest and most complex flavor. The Callebaut didn’t fare so well in the cakes; instead, it resulted in a tie between not the expensive chocolates, but between the Ghirardelli and Baker’s chocolate. So much for the much-vaunted prestige of premier chocolates.

My expert advice to you: stick with the Baker’s and the Ghirardelli. If you really want something different, go for the Callebaut, but as always, the secret ingredient to any recipe is love.

This story was published on Friday, April 18, 2003. Volume 123, Number 20

The Washington Times EDITORIAL • April 18, 2003

     As Venezuela's President Hugo Chavez celebrated the anniversary of his triumph over a short-lived coup against him this month, another, very different kind of threat emerged — the possibility of default. A combination of tight financing and excessively optimistic economic presumptions could lead to Venezuela to default on its debt this year, particularly if Mr. Chavez fails to hold a referendum on the need for new elections, as he agreed to do last Friday. Also critical to Venezuela's ability to pay will be the price of oil, which is expected to trend downward as the military campaign in Iraq comes to a close.

     A default in Venezuela would have a two-pronged effect on U.S. interests. It could lead to a full-blown, Argentina-style economic meltdown, since the government would be unable to secure any kind of multilateral financing. And market financing would become virtually nonexistent. The economic crisis could therefore turn into severe political and social upheaval. This volatility would call into question Venezuela's ability to supply the United States with oil. Currently, Venezuela is America's fifth-largest supplier of foreign crude oil.

     A Venezuelan default would also contribute to instability in the Andean region, and could, in a worst-case scenario, lead to a face-off between Colombia and Venezuela, which are currently in a war of words over Venezuela's alleged harboring of Colombian terrorists. This would lead to some difficult foreign-policy decisions for the Bush administration. And trouble in the Andean region would be felt in America through the inflow of drugs and refugees.      Venezuela's debt will total about $34 billion this year, or about 40 percent of gross domestic product, with large debt payments coming due in June, September, October and December. The government has probably overstated the price of oil this year and the amount of external financing it is likely to get. Also, the government's projections for non-oil-related revenue are too rosy. While the Venezuelan government expects to earn $18.1 billion in total revenue, Jose M. Barrionuevo, head of emerging markets strategy at Barclays Bank, pegs that number at $16 billion. Also, the government's external market financing will likely be about $3 billion less than it has budgeted. Therefore, Venezuela's average default probability is 57 percent for this year, with that number rising to 70 percent in the fourth quarter if the political situation in Venezuela remains unresolved, Mr. Barrionuevo said.

     Mr. Chavez's comments last month to small-business owners signaling his intention to restructure Venezuela's external debt this year make this fiscal scenario even more worrisome. After the president's statements caused a market panic, his government said Mr. Chavez sought a voluntary swap of debt, not a forced restructuring.

     Still, his best option for avoiding default would be to hold a referendum on elections. Such a move may lure back some investor financing. The United States and other countries brokering talks between Mr. Chavez and the opposition have a strong interest in seeing this referendum held to avert an unwelcome crisis in Venezuela and the region.

Reuters, 04.17.03, 1:16 PM ET

CARACAS, Venezuela, April 17 (Reuters) - Venezuela's Planning Minister Felipe Perez said on Thursday he expected the battered economy to contract only between 3 percent to 5 percent this year, painting a far more rosy outlook than Wall Street analysts, the IMF and even a fellow minister.

Perez, whose forecasts are often criticized by private economists as unrealistic, wrote in a note posted on his official government Web site that preliminary estimates saw inflation at around 27 percent for this year.

"As far as economic growth is concerned, we are saying minus three to minus five percent. There will be a fall in the first quarter from the previous one, but then there should be a continued recovery that will give us this range of figures for the whole year," Perez said.

But his upbeat view contrasted sharply with those of the private sector and of Finance Minister Tobias Nobrega.

Nobrega told Reuters earlier this week that the oil-reliant economy would contract by nearly 9 percent in 2003, a similar fall to last year.

In February, the government introduced a fixed exchange rate and strict currency controls in an effort to slow capital flight, protect the battered bolivar and shore up international reserves.

Ratings agency Standard & Poor's on Wednesday forecast Venezuela's economy would shrink about 15 percent, while the International Monetary Fund, urging the government to ditch the currency curbs, forecasts a huge 17 percent contraction.

Venezuela's economy is in steep decline after a year of political turmoil and a two-month strike by opponents of President Hugo Chavez curtailed the vital oil production of the world's No. 5 petroleum exporter.

Oil accounts for 50 percent of government revenue and about 80 percent of its export revenue.

Venezuela's gross domestic product shrank nearly 9 percent last year and annualized inflation, through slowing on a monthly basis, has already reached 34.1 percent this year.

The currency controls have starved the economy of dollars for nearly three months as officials try to fine tune the messy application process for businesses to access U.S. currency.

In his message, Perez also clarified comments made in the United States that the government could end the foreign exchange control system in the third quarter.

Nobrega and Central Bank officials had denied such plans, saying there was no fixed time frame for such a move. Last year, Perez squabbled publicly with Central Bank officials over monetary policy.

"I have always said that the duration of the currency controls depends on the conditions that caused them. I believe that we could begin to see those conditions improve around the third quarter. No decision has been made yet," he said.

But Perez said the government aimed to replace the current fixed rate with a crawling peg or sliding depreciation mechanism accompanied by various taxes on different foreign currency transactions.

He said he expected such a proposal to be presented to the National Assembly within the next two weeks.

The government has said currency controls would remain in place until the nation's weakened oil sector recovered from the debilitating impact of the two month strike.

State oil firm PDVSA estimates oil output is now over 3 million barrels per day, equal to production levels before the strike. But dissident oil workers have said crude output remains lower than government estimates.