The current upheaval and scandal in Venezuela has taken some of the focus off of Argentina recently, and, in the face of sovereign chaos, many market participants are wondering what will come of the existing transactions from the state-owned oil giant Petroleos de Venezuela SA (PDVSA). With a securitization program initiated in 1998, the company has repeatedly come to market, issuing debt out of the original program, most recently a $500 million last November, currently rated triple-B by Fitch Ratings and triple-B-minus on CreditWatch negative by Standard & Poor's.

While a sovereign downgrade would not trigger an automatic downgrade of PDVSA, the level of political control and influence of the oil-giant by the government makes such an action likely, said S&P. And, according to Fitch, there are growing concerns related to the government's increasing willingness to access PDVSA's assets during times of financial distress.

PDVSA and the current President, Hugo Chavez, have continually clashed. PDVSA enraged by Chavez's political stunts, has been on strike since the first week of this month. Chavez, who seems to have friends in low places including the likes of Saddam Hussein and Fidel Castro, is said to have made conditions for the country worse than when he first entered office in 1999. His failures have led to strikes and protests, in which many have been killed and injured in recent weeks. The most violent march seemed to take place on April 11; as Chavez was addressing the country in a long-winded speech, shots were fired at anti-Chavez protestors, killing and wounding many. The coup ultimately led to Chavez's resignation, however he has since regained his seat in power.

After Chavez was ousted, the country quickly placed a civilian, Pedro Carmona Estanga, in the presidential seat, the new regime immediately began to eliminate essential parts of the government, including all of the members of the Supreme Court, and dissolving the National Assembly. Chavez then quickly made his way back to the helm of the country, as his resignation was only given verbally.

At the moment, it seems as though Chavez has returned to his presidential seat with new promises for the country, including the election of a new board of directors for PDVSA who will be hired from within the company, sources say. As a result of Chavez's return, oil prices have risen for concerns that Venezuela will keep a tight control on its crude exports.

Market participants agree that PDVSA is a strong company and the deals are well structured with the ability for an extra debt service payment, an offshore trust and overcollateralization. However, sources also agree it is too difficult to predict how the deals will perform going forward with such economic and political uncertainty.

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