TCRLA_Public/030113.mbx        T R O U B L E D   C O M P A N Y   R E P O R T E R

                   L A T I N   A M E R I C A

           Monday, January 13, 2003, Vol. 4, Issue 8



TYCO INTERNATIONAL: To Use Cash To Buy Convertible Debentures
TYCO INTERNATIONAL: To Move Out of N.H. Offices Soon


ELETROPAULO METROPOLITANA: Stronger Currency Moves Shares Up
USIMINAS: Furnace Revamp Will Not Affect Customers


COEUR D'ALENE: Agrees with Asarco On Board Designees' Fate
ENERSIS: Buyers Shortlist Expected By Month's End


MILLICOM INT'L: Announces Subscriber Growth For The 4Q02

D O M I N I C A N   R E P U B L I C

UNION FENOSA: Turns To Government For Debt Aid


EMPRESAS ICA: S&P Affirms, Off CreditWatch; Outlook Negative

T R I N I D A D   &   T O B A G O

BWIA: Chief Favors Cooperation Over Merger
BWIA: Predicts Profitability Later This Year


GALICIA URUGUAY: Plan To Reimburse Deposits Proceeds On Schedule


PCV: WB Financing Arm Declines $225M Loan For Now
PDVSA: Moody's Downgrades Ratings Amid Strike
PDVSA FINANCE: Moody's Cuts Ratings
* Venezuela's Rating Outlook Remains Negative

     - - - - - - - - - -


TYCO INTERNATIONAL: To Use Cash To Buy Convertible Debentures
Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) announced
Thursday its intent to purchase, through its wholly-owned
subsidiary, Tyco International Group S.A., Tyco International
Group's Zero Coupon Convertible Debentures due February 12, 2021
with cash. Under the terms of the debentures, Tyco has the option
to pay for the debentures with cash, Tyco common shares, or a
combination of cash and shares. Tyco has elected to pay for the
debentures solely with cash.

If all outstanding debentures are surrendered for purchase, the
aggregate cash purchase price will be approximately
$1,850,809,508. It is anticipated that debenture holders'
opportunity to surrender debentures for purchase will commence on
January 14, 2003, and will terminate on February 12, 2003. Under
the terms of the debentures that may be surrendered for purchase,
Tyco is required to pay for all debentures surrendered during
such time period.

This announcement is neither an offer to purchase nor a
solicitation of an offer to sell the debentures. On the date
debentures may first be surrendered for purchase, Tyco will file
a Schedule TO with the SEC and will give notice to debenture
holders specifying the terms of Tyco's obligation to purchase the
debentures. Debenture holders are encouraged to read these
documents carefully before making any decision with respect to
the surrender of debentures, because these documents will contain
important information regarding the details of Tyco's obligation
to purchase the debentures.

CONTACT:  Tyco International Ltd.
          Gary Holmes (Media), +1-212-424-1314
          Kathy Manning, (Investors), +1-603-778-9700

TYCO INTERNATIONAL: To Move Out of N.H. Offices Soon
Bermuda-based Tyco International, Inc. is preparing to leave its
offices in Exeter, N.H., according to Knight Ridder Business News
on Thursday. The Company has been on a cost cutting plan in an
effort to regain investor confidence after top executives were
indicted of embezzling company funds.

Rent in the in 9W. 57th Street building went up to as much as
US$130 per square foot, during the peak of the real estate
market. Rent in the building started out at US$90per square foot.

The Company rents 31,000 square feet on the 43rd floor. The
report indicated that Tyco may have to find another company to
sublet it and take a loss on the space as company spokesman Gary
Holmes said that the offices are in a "long-term lease".

However, the Company has not decided where it will be moving the
offices and its 30 employees.

Holmes said, "We're looking for a less expensive location, that
in which more people -- more of the staff -- could work

The report mentioned New Jersey, Connecticut, Pennsylvania and
elsewhere in New York as possible locations to where the Company
might move.

The Trenton times specifically reported that the Company
negotiating to rent offices in West Windsor, N.J., which is near
to new CEO Edward Breen's home in New Hope, Pasadena.

         Corporate Office
         The Zurich Centre, Second Floor
         90 Pitts Bay Road
         Pembroke HM 08, Bermuda
         Phone: 441-292-8674
         Home Page:
         Gary Holmes (Media)
         Tel +1-212-424-1314
         Kathy Manning (Investors)
         Tel +1-603-778-9700


ELETROPAULO METROPOLITANA: Stronger Currency Moves Shares Up
Shares of Brazilian power distributor Eletropaulo Metropolitana
SA rose BRL2.4, or 7.7% to BRL33.5, a four-month on Thursday,
adding to a 13% gain in the previous five trading days, Bloomberg
says. Some analysts say that the increase was driven by a
strengthening currency.

"The rise in the currency has improved Eletropaulo's solvency
situation," said Fabio Motta, who helps manage BRL5 billion in
equities and bonds at Sul America Investimentos in Sao Paulo.
"The stock continues to be very cheap despite its recent gains."

The real gained 6.7% against the U.S. dollar this year. This may
help Eletropaulo reduce debt by as much as BRL600 million, said
Gustavo Gatass, a power utility analyst at UBS Warburg LLC in Rio
de Janeiro. The Company's debt owed in dollars was BRL3.9 billion
in the third quarter, or 62% of its total outstanding debt,
Gatass said.

Meanwhile, another analyst, Oswaldo Telles, a utility analyst at
Banco Bilbao Vizcaya Argentaria SA in Sao Paulo, believes that
the rise in the stock was prompted by speculations that its US-
based parent AES may sell some assets to pay part of its debt to
the government's development bank. Lower debt at the controlling
shareholder would help Eletropaulo refinance obligations and
increase investment.

          Avenida Alfredo Egidio de Souza Aranha 100-B,
          13 andar 04726-270 San Paulo
          Phone: +55-11-548-9461, +55 11 5696 3595
          Fax: +55-11-546-1933
          Luiz D. Travesso, Chairman and President
          Orestes Gonzalves Jr., VP Finance/Investor Relations

USIMINAS: Furnace Revamp Will Not Affect Customers
Brazilian flat steel maker Usiminas said the renovation of its
blast furnace No. 2 will not impact its customers, reports
Business News Americas. The revamp, which cost BRL99 million, is
a huge chunk of the Company's intended BRL323 million (US$97.9
million) in investments this year. The planned investment amount
excludes its Sao Paolo subsidiary Cosipa.

"The company has already taken measures to insure that its supply
contracts are fulfilled," a spokesman for the Company was quoted
in the report.

The Company had already contracted several companies for the
revamp, which is expected to last 85 days.

The blast furnace will be installed by Usiminas' construction arm
Usimec and Austrian firm Voest-Alpine. Usimec will receive BRL8
million, while Voest will get BRL23 million for the job. The two
companies will also be responsible for the supply of mechanical

Usiminas has commissioned French electric and transport company
Alstom to install new equipment for the project, for BRL22

Brazilian refractory company Ibar will be replacing the furnace's
refractory bricks for BRL8.8 million.

Meanwhile, other contracts are still under negotiation.

The Company estimates output this year, to reach 4.6Mt, excluding
production from Cosipa. Annually, Cosipa and Usiminas produce a
total 9.7Mt of crude steel.

Usiminas' total sales volume last year reached 4.13Mt.

CONTACT:  Usinas Siderurgicas de Minas Gerais Usiminas PN A
          Rua Prof. Jose Vieira de
          Mendonca, 3011
          Engenheiro Nogueira
          31310-260 Belo Horizonte - MG
          Tel  +55 31 3499-8000
          Fax  +55 31 3499-8475
          Jose Augusto Muller de Oliveira Gomes, Chairman


COEUR D'ALENE: Agrees with Asarco On Board Designees' Fate
Coeur d'Alene Mines Corporation (NYSE:CDE) announced Thursday
that Coeur and Asarco Inc. have reached an agreement that calls
for the resignation of its two designees from Coeur's Board of
Directors and contemplates the orderly sale by Asarco in the
future of its 7,125,000 shares of Coeur common stock that it

As a result of this agreement, Xavier Garcia de Quevedo Topete
and Daniel Tellechea Salido have resigned from Coeur's Board of
Directors. These individuals, who are officers of Grupo Mexico,
S.A. de C.V., which is the parent of Asarco, were first elected
to Coeur's Board in 1999 when Coeur acquired certain silver
assets from Asarco in exchange for shares of Coeur common stock.
In addition, Asarco has agreed to limit its resale of these
common shares it has owned since 1999 to 500,000 shares to any
one investor. Finally, this agreement provides for the waiver by
Asarco of certain approval authority it has had since the 1999
transaction over certain corporate actions by Coeur.

Dennis E. Wheeler, Coeur's Chairman and Chief Executive Officer,
remarked, "Coeur has enjoyed a strong relationship with Asarco
and Grupo Mexico over the past several years. We are very
appreciative of their contributions to Coeur's Board."

Asarco plans to publicly sell its shares of Coeur common stock
either (i) pursuant to Coeur's currently pending universal shelf
registration statement that Coeur has on file with the SEC after
it is declared effective, or (ii) after April 7, 2003, when an
exemption from registration is expected to become available to
cover Asarco's sales.

Coeur d'Alene Mines Corporation is the world's largest primary
silver producer, as well as a significant, low-cost producer of
gold. Coeur has mining interests in Nevada, Idaho, Alaska,
Argentina, Chile and Bolivia.

A registration statement, which is expected to be amended in the
near future, relating to the securities referred to above has
been filed with the Securities and Exchange Commission but has
not yet become effective. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration
statement becomes effective. This press release shall not
constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any state
in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any
such state.

ENERSIS: Buyers Shortlist Expected By Month's End
Financially trapped Chilean electricity holding company Enersis
SA is currently seeking to raise US$0.9-1.0 billion from the sale
of its assets. The company will narrow down the list of likely
buyers by the end of this month, Dow Jones reports from an
interview with Chairman Enrique Garcia by local business daily El

Many companies are interested in buying the assets, "and we'll
have the most select of these (suitors) by the end of the month,"
Garcia said, naming power plant Central Canutillar and
distributor Rio Maipo as two of the interested companies.

Enersis, a unit of Spain's Endesa, is selling assets to reduce
its US$2.6 billion debt. It is also planning on a US$1.5-billion
capital increase for the same reason.

"We should have all scenarios perfectly developed by April 30,"
implying that "asset disposals and capital increase should be at
an advanced stage or practically concluded" by then, Garcia said.

To see financial statements:

          Investor Relations:
          Ricardo Alvial
          Chief Investments & Risks Officer of Enersis
          Phone: (562) 353-4682
          Susana Rey,
          Ximena Rivas,
          Pablo Lanyi-Grunfeldt,


MILLICOM INT'L: Announces Subscriber Growth For The 4Q02
- 28% annual growth in total subscribers to 4.3 million*
- 25% annual growth in proportional subscribers to 3.0 million*
- 52% annual growth in proportional pre-paid subscribers in Asia
- 55% annual growth in proportional pre-paid subscribers in
Central America

Millicom International Cellular S.A. (MIC) (Nasdaq Stock Market:
MICC), the global telecommunications investor, announced Thursday
that in the fourth quarter of 2002 its worldwide operations in
Asia, Latin America* and Africa added 316,395 net new cellular
subscribers or 215,165 subscribers on a proportional basis.

At December 31, 2002, MIC's worldwide cellular subscriber base*
increased by 28% to 4,252,037 cellular subscribers from 3,322,869
as at December 31, 2001. Particularly significant annualized
percentage increases were recorded in Cambodia, Pakistan, Sri
Lanka, Sierra Leone, Ghana and Central America.

At December 31, 2002, MIC had 3,021,873 proportional cellular
subscribers*, an increase of 25% on the 2,415,474 proportional
subscribers, reported at December 31, 2001.

(See table:

Within the 3,021,873 proportional cellular subscribers* reported
at the end of the fourth quarter, 2,667,400 were pre-paid
customers, representing a 36% increase on the 1,967,571
proportional prepaid subscribers* recorded at the end of December
2001. Pre-paid subscribers currently represent 88% of gross
reported proportional cellular subscribers.

(* Excluding El Salvador)

Millicom, whose credit rating was recently cut by Moody's
Investors Service two levels to Caa2 from B3, has been selling
assets to pay its debt, which it said was "unsustainable in the
long term."

Millicom has retained Lazard to assist it in reviewing strategic
alternatives to address Millicom's ongoing liquidity needs,
including other potential asset sales and divestitures, the
availability of new debt and equity financing and potential debt
restructuring alternatives.

Millicom International Cellular S.A. is a global
telecommunications investor with cellular operations in Asia,
Latin America and Africa. It currently has a total of 17 cellular
operations and licenses in 16 countries. The Group's cellular
operations have a combined population under license (excluding
Tele2) of approximately 369 million people. In addition, MIC
provides high-speed wireless data services in seven countries.
MIC also has a 6.8% interest in Tele2 AB, the leading alternative
pan-European telecommunications company offering fixed and mobile
telephony, data network and Internet services to over 16 million
customers in 21 countries. The Company's shares are traded on the
Nasdaq Stock Market under the symbol MICC.


Marc Beuls
Telephone: +352 27 759 101
President and Chief Executive Officer
Millicom International Cellular S.A., Luxembourg

Andrew Best
Telephone: +44 (0) 20 7321 5022
Shared Value Ltd, London

Visit MIC's homepage at

D O M I N I C A N   R E P U B L I C

UNION FENOSA: Turns To Government For Debt Aid
Spanish company Union Fenosa said it piled up debts amounting to
RD$14.5 billion in the Dominican Republic, where it controls two-
thirds of power distribution, during its first four years of
operation, reports DR1 Daily News. In order to deal with the debt
crisis, the Company sent a letter to President Hipolito Mejia
asking the DR government's assistance to provide it some US$200

The letter, dated 19 December 2002 and signed by executive vice
president Antonio Pantoja de Andres, revealed that Edesur and
Edenorte owe half of the total debt (RD$7 billion) to the mother
company, Union Fenosa, and its affiliates. It also pointed out
that the Dominican government has not kept up its half of the
capitalization process, and urges it to do so as expediently as


EMPRESAS ICA: S&P Affirms, Off CreditWatch; Outlook Negative
Standard & Poor's Ratings Services said Thursday it affirmed its
'CCC' corporate credit rating on Mexican construction company
Empresas ICA Sociedad Controladora S.A. de C.V. (ICA).

Standard & Poor's also affirmed the 'CC' subordinated debt rating
on ICA's 5% subordinated convertible bond due in March 2004, of
which $96.3 million remains outstanding. The outlook is negative.
All ratings were removed from CreditWatch, where they were placed
on Aug. 2, 2002.

The rating action follows the company's announcement on Dec. 20,
2002, that with the proceeds from the 10-year loan signed with
Banco Inbursa S.A. (BB+/Stable/B) for Mexican Peso (MxP) 1,180
million (about $120 million), it has refinanced outstanding loans
amounting to MxP372 million (about $37 million).

The affirmation also reflects ICA's announcement that it has
repurchased approximately $71 million, face value, of its
subordinated bond leaving the outstanding amount at $96.3

"The ratings reflect liquidity concerns and the company's weak
operating performance. During the third quarter 2002, the
recovery of provisions related to the delivery and acceptance of
several industrial construction projects was offset by the
cancellation of accounts receivable and the creation of
provisions related to the light rail and San Juan Coliseum
projects in Puerto Rico," stated Standard & Poor's credit analyst
Jose Coballasi.

The company's consolidated backlog as of the third quarter stood
at five months of construction work. However, the agreement to
complete the Chiapas bridge project, contracts recently signed by
ICA Flour Daniel, and additional civil construction contracts
should prevent a further decline in the company's backlog during
the fourth quarter.

ICA's financial performance remains weak as seen in its key
financial ratios. During the first nine months of 2002, ICA
posted an EBIDTA interest coverage, total debt to EBITDA, and FFO
to total debt ratio of 1.3x, 10.4x, and -5.4%, respectively.
Nevertheless, the company was able to reduce its total debt by
around $80 million during 2002, through asset sales, and
continues its efforts to improve its operating margin. ICA
recently announced further headcount reductions that are expected
to yield savings of about MxP121 million (around $12 million). It
should also be noted that the company is in the midst of a debt
restructuring effort, which has already led to improvements in
the company's capital structure and maturity schedule.

ANALYSTS:  Jose Coballasi, Mexico City (52) 55-5279-2014
           Manuel Guerena, Mexico City (52) 55-5279-2011

T R I N I D A D   &   T O B A G O

BWIA: Chief Favors Cooperation Over Merger
BWIA Chief Conrad Aleong expressed his disapproval of the
proposed merger of Caribbean airlines in a press conference with
International Air Transportation Association Director General
Giovanni Bisignani, according to an article released by the
Trinidad Guardian. Mr. Aleong suggests that the solution for the
troubled regional airlines would be functional cooperation,
functional integration, rather than a merger.

"Maybe all the carriers can put in one maintenance company and
then do all the maintenance for all the carriers. We considered
an accounting company for all the accounting for all the
airlines," said Mr. Aleong.

Mr. Bisignani echoes Mr. Aleong's opinions. He recommends a
consolidation, where each airline would run a different part of
the operations of its partners.

Mr. Aleong also belied reports that Air Jamaica's chairman Butch
Stewart did not want to cooperate with BWIA. According to Mr.
Aleong, Mr. Stewart may simply be against the idea as the
integration of the two carriers in a merger is very similar to a
financial merger.

Aleong noted that an arrangement very much like BWIA's
partnership with LIAT may be more likely to happen than a merger.

          Phone: + 868 627 2942
          Home Page:
          Conrad Aleong, President and CEO (Trinidad)
          Beatrix Carrington, VP Marketing and Sales (Barbados)
          Paul Schutz, CFO (Trinidad)

BWIA: Predicts Profitability Later This Year
Trinidad and Tobago flagship carrier BWIA said that it has
stopped the financial hemorrhaging it faced since the September
11 attacks, reports the Trinidad Guardian. The Company is
expecting to operate in the black again this year.

Last year, the airline posted an US$8.4 million loss during the
first six months. The airline's chairman Conrad Aleong revealed
that the Company has a plan to produce profit this year. Aleong,
however, would not divulge the details of the said plan.

Aleong boasted that, "You will hear us coming back to shareholder
value. Our shareholders have waited too long to get a return and
get dividends."

The airline will have to implement the plan to save at least
US$1.4 million in saving on operations per month before the
deadline three weeks from now.

The plan is part of the requirements imposed by the state when it
granted a loan to help the airline's recovery. The report said
that the state will stop disbursements on the loan once the
airline fails to meet the savings target stipulated. BWIA has not
implemented the plan yet, and not completed the negotiations for
labor concessions with the unions.

Meanwhile, the International Civil Aviation Organization predicts
the global airline industry to start picking up. The organization
expects airlines to generate profits in two years from now.

The increase in the prices of fuel has added another challenge to
the airlines. BWIA alone paid US$34 million in fuel costs last


GALICIA URUGUAY: Plan To Reimburse Deposits Proceeds On Schedule
Banco Galicia Uruguay's schedule for returning frozen dollar-
denominated deposits worth around US$947 million to the public on
Thursday went ahead as planned, the Uruguayan central bank
confirmed in a statement.

The first 3% of the dollar deposits are to be repaid in cash this
month, reports Business News Americas. By the end of 2003, 15%
will have been returned. In 2004, a further 15% will be handed
back. In the following seven years, 10% will be returned

Galicia Uruguay was intervened and had its deposits frozen due to
a bank run by its numerous Argentine clients. In December, an
intervening judge approved the plan to reimbursement deposits.
The plan, according to Galicia Uruguay, was accepted by 82% of

Galicia Uruguay was the country's second-largest private
financial institution in terms of deposits before it was
intervened and suspended by the central bank in mid-February
after losing US$500 million in deposits between December last
year and January 2002. It is not yet known when the bank will be
allowed to reopen. Galicia Uruguay is controlled by Argentina's
largest commercial private bank, Banco Galicia.

          Teniente General Juan D. Peron 456, Piso 3
          1038 Buenos Aires, Argentina
          Phone: (54 11) 4343 7528 / 9475
          Home Page:
          Eduardo J. Escasany,  Chairman and CEO
          Sergio Grinenco, CFO, Banco de Galicia y Buenos Aires

          World Trade Center
          Luis A. Herrera 1248 Piso 22 Montevideo
          Tel.:(+598-2) 628-1230


PCV: WB Financing Arm Declines $225M Loan For Now
Apparently Perez Companc - Venezuela (PCV), which is controlled
by Argentina's Pecom Energia, will have to wait a while before
receiving loans totaling US$225 million from the World's Banks
private sector financing arm, Reuters indicates.

The International Finance Corporation (IFC) on Thursday
considered separate US$80 million and $45 million loans for PCV
and is also planning to arrange a syndicated loan with the
participation of private banks expected to total US$100 million.

However, the IFC said it won't provide the money until the
situation in Venezuela "normalizes" but promised to continue to
work closely with PCV to enable the client to be in a position to
move forward with the project

PCV has requested IFC assistance in funding capital expenditure
to increase production in each of the fields it operates,
according to the IFC. The funds will be used for drilling a new
producer and water injector wells, the construction of new field
facilities and workovers on existing wells.

PCV, which accounts for about 26% of Pecom's total oil
production, operates four oil-producing fields in Venezuela under
operating service agreements with Petroleos de Venezuela SA.

PDVSA: Moody's Downgrades Ratings Amid Strike
Moody's Investors Service downgraded the debt ratings of
Petroleos de Venezuela SA (PDVSA) as the state-owned oil company
struggles to meet financial obligations amid a nationwide strike
aimed at forcing President Hugo Chavez to resign or hold early

The ratings downgraded were:

- PDVSA's local currency issuer rating to B3 from Ba1

- PDVSA's foreign currency obligations (medium term note
programs) to B3 from Ba3

- PDV America Inc.'s senior note rating to B3 from Ba3

Moody's maintains a negative outlook on the ratings.

"There is no evident resolution at hand to the political conflict
or to PDVSA's strike conditions, which indicates continuing
uncertainty and possibly worsening conditions surrounding the
state oil company's ability to resume some level of normal
operations," Moody's said in a statement.

The strike, now on its sixth week, has reduced PDVSA's production
from 3 million barrels of crude oil a day to about 600,000

The Company, which had more than US$7 billion in long-term debt
at the end of 2001, has a US$150-million debt payment coming due
Feb. 15. Analysts say the payment will be covered by the at least
$300 million of export revenue accumulated in the Cayman Island-
registered company's account. The Company's finance unit makes
quarterly payments on about US$3.5 billion in debt securities.

PDVSA FINANCE: Moody's Cuts Ratings
Moody's Investors Service downgraded the ratings of PDVSA Finance
Ltd. due to the ongoing national strike that has affected
Venezuela's oil sector.

The ratings downgraded are:

- $400,000,000 6.45% Notes due 2004, to B3 from Ba1

- $300,000,000 6.65% Notes due 2006, to B3 from Ba1

- $300,000,000 6.80% Notes due 2008, to B3 from Ba1

- $400,000,000 7.40% Notes due 2016, to B3 from Ba1

- $400,000,000 7.50% Notes due 2028, to B3 from Ba1

- $400,000,000 8.750% Notes due 2004, to B3 from Ba1

- $250,000,000 9.375% Notes due 2007, to B3 from Ba1

- $250,000,000 9.750% Notes due 2010, to B3 from Ba1

- $100,000,000 9.950% Notes due 2020, to B3 from Ba1

- EURO 200,000,000 6.250% Notes due 2006, to B3 from Ba1

- $500,000,000 8.50% Notes due 2012 to B3 from Ba1

All the ratings have been placed on review for possible

Moody's actions came in relation to the downgrade on the ratings
of the local currency issuer rating of PDVSA to B3 from Ba1, and
the long term foreign currency rating of PDVSA to B3 from Ba3,
both of which have negative outlooks.

"The ratings of the PDVSA Finance notes are linked to the local
currency and foreign currency ratings of PDVSA, which generates
the receivables that back the repayment of the rated notes. As a
result of this linkage, any change in those ratings may also
result in a change in the PDVSA Finance notes' ratings," Moody's
said in a statement.

New York
Linda Stesney
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Maria Muller
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

* Venezuela's Rating Outlook Remains Negative
Standard & Poor's Ratings Services affirmed Thursday its 'CCC+'
long-term and 'C' short-term foreign currency sovereign credit
ratings on the Bolivarian Republic of Venezuela.

The outlook remains negative. (Standard & Poor's does not rate
Venezuela's local currency debt.)

"The heightened risk of default on Venezuela's foreign currency
debt due to the ongoing strike at Petroleos de Venezuela (foreign
currency rating CCC+/Negative/C) was taken into account by
Standard & Poor's in its Dec. 13, 2002, downgrade of its long-
term foreign currency sovereign credit rating on Venezuela to
'CCC+' from 'B-'," said sovereign credit analyst Richard Francis.
"However, the continued, almost complete, cessation of oil
revenue, which has provided over 50% of total government revenue,
has engendered a severe cash crunch and accounts for the
government's recent difficulty in rolling over its unrated
Venezuelan bolivar-denominated debt," he added.

Mr. Francis noted that Standard & Poor's expects the government
to resort to increased central bank monetization of its debt,
which will accelerate inflation and further depreciate the
currency, and that the risk of the imposition of exchange
controls has also increased.

"International reserves have fallen by nearly US$1.4 billion
since the strike began," said Mr. Francis. "Over the past week,
there has been an accelerated loss of reserves, with total
international reserves reported at US$14.4 billion as of January
8 down from nearly US$15.8 billion at the beginning of December
2002," he concluded.

According to Standard & Poor's, the central government's external
debt service will total only about US$250 million in January and
February. However this amount rises to US$601 million in March.
If reserves continue to fall, timely foreign currency debt
service payments will become more onerous.

ANALYSTS:  Richard Francis, New York (1)-212-438-7348
           Jane Eddy, New York (1) 212-438-7996


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter Latin American is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ,
and Beard Group, Inc., Washington, DC. John D. Resnick, Edem
Psamathe P. Alfeche and Oona G. Oyangoren, Editors.

Copyright 2003.  All rights reserved.  ISSN 1529-2746.

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The TCR Latin America subscription rate is $575 per half-year,
delivered via e-mail.  Additional e-mail subscriptions for
members of the same firm for the term of the initial subscription
or balance thereof are $25 each.  For subscription information,
contact Christopher Beard at 240/629-3300.

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