The Impact of Lower Oil Prices Highlighted in Fitch's 'Inside Credit'
20 December 2014 - 12:24AM
Business Wire
This week's edition of Inside Credit focuses on the impact of
falling oil prices throughout the capital markets. Featured stories
include Fitch's downgrade of Venezuela and the 2015 Outlook for
global oil and gas companies.
On Thursday, December 18, Fitch Ratings downgraded Venezuela's
long-term foreign and local currency IDRs from 'B' to 'CCC'. The
two-notch downgrade reflects the impact of sharp declines in
international oil prices amid Venezuela's reduced external
financing flexibility and rising macroeconomic instability.
'With oil expected to account for 92% of current external
receipts and 50% of central government revenues this year,
Venezuela is highly commodity dependent,' said Erich Arispe,
Director of Latin American sovereigns. 'The country's capacity to
respond to oil price shock is constrained by its relatively low
level of international reserves, constraints to its operational
liquidity, increasing macroeconomic instability, and limited
sources of external financing.'
According to Fitch's 2015 Global Oil and Gas Outlook, most
investment-grade oil and gas companies should be able to weather
low oil prices due to their strong balance sheets and ample
liquidity, provided the downturn is not sustained long-term.
However, the outlook for the sector is Negative due to current
prices falling below Fitch's base case price assumptions of $75/bbl
for WTI and $80/bbl for crude.
'High yield issuers, particularly those in the 'B' range, may
see more wobble given their thinner liquidity cushions and spottier
capital markets access,' said Sean Sexton, Managing Director.
Other topics covered in this week's edition of Inside Credit
include:
--The outlook for global sovereign ratings;
--Heightened risks to Russia's economy from interest rates and
the rouble;
--Fitch's downgrade of France to 'AA';
--The results of the UK bank stress tests;
--Strong European leveraged loan issuance expected in 2015;
--Ratings in the Middle East and Africa will be dominated by oil
prices, politics and policies in 2015;
--Australia's fiscal outlook weakened by falling commodity
prices.
'Inside Credit' is a weekly snapshot of Fitch Ratings'
noteworthy content, selected from all sectors and regions. To
receive the weekly edition, distributed every Friday at 8am ET
beginning in the new year, please sign up here:
http://pages.fitchemail.fitchratings.com/InsideCreditSignUp/
The next edition of Inside Credit will be distributed on Friday,
Jan. 9, 2015.
Additional information is available at
'www.fitchratings.com'.
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY
FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION,
RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM
THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY,
CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER
RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE
OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD
PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD
ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE
ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
Fitch RatingsMedia Relations:Alyssa Castelli, +1
212-908-0540alyssa.castelli@fitchratings.com