Moody's Downgrades Orinoco Heavy Projects to B1

Moody's has downgraded its ratings to B1 from Ba3 for the secured long-term debt issued by four heavy oil projects in Venezuela. The rating outlook is stable.

The four projects - Ameriven, Sincor, Cerro Negro and Petrozuata - upgrade and export heavy oil in the Orinoco region of Venezuela's southeast.

Moody's move comes a month after fellow credit ratings agency Fitch cut its ratings on the same four projects to B+ from BB and placed all on rating watch negative.

"The downgrade incorporates greater financial risk for the projects as a result of increased royalties and pending income tax hikes," Moody's said. Once new and proposed tax and royalty increases take effect, Orinoco projects will lose the tax incentives they originally enjoyed.

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