/raid1/www/Hosts/bankrupt/TCRLA_Public/030114.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

           Tuesday, January 14, 2003, Vol. 4, Issue 9

                           Headlines

A R G E N T I N A

AOL LATIN AMERICA: Parent, Cisneros Group Convert to Common
* Argentina Quickly Rescinds Dollar-to-Peso Loan Conversion
* Argentina Plans to Use Reserves for Upcoming $1B Debt Payment


B E R M U D A

TYCO INTERNATIONAL: Initiates Cash Payment on Convertibles


B R A Z I L

AES TIETE: Exempted From Paying BRL85 Mln Owed To MAE
CELG: Going Back To The Negotiating Table With Eletrobras
CEMIG: Mirant Completes Sale Of 3.6% Stake
INEPAR: Strikes Sale Agreement With Gerdau


M E X I C O

AHMSA: Final Court Probe Results Expected This Month
CORPORACION DURANGO: Fitch Downgrades Ratings To 'C'
GRUPO TMM/TFM: S&P Lowers Ratings on Transport Concerns


P E R U

EMPRESAS LUCCHETTI: Shuts Down Plant On Eviction Order


T R I N I D A D   &   T O B A G O

BWIA: CEO Forecasts Profit Despite Long Odds
BWIA: Shareholders File Suit Over IPO Disclosures
CARONI LTD: Union Leader Slams VESP


V E N E Z U E L A

BANCO DE VENEZUELA: Fitch Lowers Ratings; Outlook Still Negative
BANCO DEL CARIBE: Ratings Downgraded Following Sovereign Cut
BANCO EXTERIOR: Difficult Operating Environment Pulls Down Rating
BANCO MERCANTIL: Fitch Lowers Ratings On Possibility Of Default
BANCO OCCIDENTAL: Chaotic Political Environment Prompts Cut

BANCO PROVINCIAL: Fitch Lowers Ratings On Worsening Economy
BANCO VENEZOLANO: Ratings Cut Amidst Severe Economic Downturn
BANESCO BANCO: Fitch Drops Ratings As Economy Crumbles Further
CITGO/PDV AMERICA: Fitch Downgrades Ratings; Watch Negative
HOVENSA: Fitch Keeps Rating Watch Negative, 'BBB-' Debt Rating

PDVSA: Forecasts Additional Layoffs
PDVSA/EDC: Fitch Lowers Ratings as Economic Turmoil Continues
PDVSA FINANCE: Fitch Cuts Ratings To 'BB-'; On Watch Negative
PDVSA FINANCE: S&P Lowers Senior Unsecured Notes Ratings
CERRO NEGRO: Fitch Drops Debt Ratings To `B'

HAMACA: Fitch Cuts Ratings On $1.1B Of Loans
PETROZUATA FINANCE: Fitch Lowers Ratings Following Sovereign Cut
SINCOR: Fitch Doubts Ability To Maintain Normal Operations
* Fitch Cuts Venezuela's Sovereign Foreign Currency to 'CCC+'


     - - - - - - - - - -


=================
A R G E N T I N A
=================

AOL LATIN AMERICA: Parent, Cisneros Group Convert to Common
-----------------------------------------------------------
America Online Latin America, Inc. (Nasdaq:AOLAC), one of the
leading interactive services providers in Latin America,
announced Friday that America Online, Inc. and the Cisneros Group
of Companies converted 32,328,736 and 28,508,177 shares,
respectively, of preferred stock to class A common stock. The
stock conversion occurred Friday, January 10, 2003.

AOL Latin America noted that as a result of this conversion there
are now 127,906,978 shares of class A common stock outstanding.
This conversion was effected to support the Company's efforts to
maintain its listing on the NASDAQ SmallCap Market.

AOL Latin America further noted that the stock conversion did not
change the aggregate number of outstanding shares for all classes
of stock; however, the number of shares of class A common stock
increased by the same amount that the shares of preferred stock
decreased. The Company believes that the conversion benefits
class A common stock holders as it includes the forfeiture of
dividends, liquidation preferences, and other preferential rights
associated with the converted preferred stock by the Cisneros
Group of Companies and America Online, Inc.

There can be no assurance that this stock conversion will result
in AOL Latin America's continued listing on the NASDAQ SmallCap
Market beyond January 13, 2003. In the event that the Company is
no longer able to continue trading on the NASDAQ SmallCap Market,
the Company expects that its class A common stock would trade on
the Over-the-Counter Bulletin Board (OTCBB). The OTCBB is a
regulated quotation service that displays real-time quotes, last-
sale prices, and volume information for more than 3,600 equity
securities.

About AOL Latin America

America Online Latin America, Inc. (Nasdaq:AOLAC) is the
exclusive provider of AOL-branded services in Latin America and
has become one of the leading Internet and interactive services
providers in the region. AOL Latin America launched its first
service, America Online Brazil, in November 1999, and began as a
joint venture of America Online, Inc., a wholly owned subsidiary
of AOL Time Warner Inc. (NYSE:AOL), and the Cisneros Group of
Companies. Banco Itau, a leading Brazilian bank, is also a
minority stockholder of AOL Latin America. The Company combines
the technology, brand name, infrastructure and relationships of
America Online, the world's leader in branded interactive
services, with the relationships, regional experience and
extensive media assets of the Cisneros Group of Companies, one of
the leading media groups in the Americas. The Company currently
operates services in Brazil, Mexico and Argentina and serves
members of the AOL-branded service in Puerto Rico. It also
operates a regional portal accessible at www.aola.com. America
Online's 35 million members worldwide can access content and
offerings from AOL Latin America through the International
Channels on their local AOL services.

CONTACT:  America Online Latin America, Inc., Fort Lauderdale
          Financial Community
          Monique Skruzny, 954/689-3256
          aolairr@aol.com

          or

          News Media
          Fernando Figueredo, 954/689-3256
          LatAmPressMail@aol.com


* Argentina Quickly Rescinds Dollar-to-Peso Loan Conversion
-----------------------------------------------------------
A rule requiring foreign companies to pay loans in dollars that
had been converted to pesos last year was nullified by the
government, reports Bloomberg News. The rule, which was ordered
on Friday, was annulled later on the same day. The government
cited "problems it(the rule) would create" as the reason for the
cancellation.

Analysts said that the rule prompted discrimination against
foreign companies. Economist Luis Secco said, "The decree would
have been challenged in court in no time."

The government had previously converted all dollar loans and
deposits in the country into pesos to help companies repay debts.
Banks, including Citigroup Inc., FleetBoston Financial Corp. and
Banco Santander Central Hispano SA, lost more than US$11 billion
on what had been dollar loans because of the exchange rate. The
local currency had lost about 70 percent of its value to the
dollar last year.

The annulment of the decree comes as the country negotiates for a
new aid package from the International Monetary Fund.


* Argentina Plans to Use Reserves for Upcoming $1B Debt Payment
---------------------------------------------------------------
The government of Argentina may use its reserves to pay almost
US$1 billion due on Jan. 17, reports local daily El Clarin.
Earlier, the country has said that it will not be using its
central bank reserves to make debt payments.

According to the report, the government would use the reserves
make a debt payment due on Jan. 17, in case talks with the
International Monetary Fund is not completed by the said date.

The IMF had sent a team to Argentina to negotiate an agreement
aimed at helping the country avoid defaulting on US$8 billion of
debt due through June.

The country is also asking for a three-year extension on US$5
billion it owes to multilateral lenders. The country had
previously asked for a one-year extension on the debt.

The government decisions are aimed at providing a better
financial environment for the new government, which takes over on
May 25, according to the report.

The country had defaulted on a record US$95 billion of debt in
December 2001, making it lose its credit lines to several
lenders, except the IMF.



=============
B E R M U D A
=============

TYCO INTERNATIONAL: Initiates Cash Payment on Convertibles
----------------------------------------------------------
In a bid to reduce more than US$11 billion in debt coming due
this year, Tyco International Ltd. will begin paying holders of
convertible debt due in February 2021 in cash today, January 14,
until February 12, when the holders are allowed to demand
payment, says The Bermuda Sun.

According to Tyco spokesman Gary Holmes, the Bermuda-based
company faced a total of US$2.3 billion in outstanding
convertibles but a part of that was already paid last year,
leaving only the $1.85 billion balance. The Company had the
option to pay with shares or a combination of cash and stock but
chose cash. The stock fell 71% last year.

Last week, Tyco said it was raising US$6 billion in a loan and a
convertible bond sale, the biggest of its kind, to help repay the
existing debt including, the bond that is payable February 12.

As of September 30, Tyco had about $24.2 billion in debt.

CONTACT:  (Media)
          Gary Holmes
          Tel: 212-424-1314

          (Investors)
          Kathy Manning
          Tel: 603-778-9700



===========
B R A Z I L
===========

AES TIETE: Exempted From Paying BRL85 Mln Owed To MAE
-----------------------------------------------------
A federal court in the city of Sao Paulo ruled that state power
generator AES Tiete should not pay the BRL85 million it owes on
the country's wholesale electricity exchange MAE, reports Dow
Jones. The court supported its ruling by saying that the Sao
Paulo utility hasn't received a loan from Brazil's development
bank BNDES to make up for losses from a power rationing program
in 2001. AES Tiete claims it has a right to BRL124 million from
BNDES.

U.S.-based power giant AES Corp. acquired 53% stake in AES Tiete
in 1999 during an auction promoted by the Sao Paulo state
government. The consortium paid BRL938 million for its control.

Recent reports, however, suggest that AES may unload its stake in
the Brazilian generator in order to reduce debts.

CONTACT:  AES CORP
          1001 North 19th Street
          Arlington,  VA   22209
          Phone: (703) 522-1315
          Fax: (703) 528-4510
          E-mail: investing@aesc.com
          Home Page: http://www.aesc.com/
          Contact:
          Roger W. Sant
          Paul T Hanrahan


CELG: Going Back To The Negotiating Table With Eletrobras
---------------------------------------------------------
Brazil's Goias state power distributor Celg will restart talks
with Eletrobras after a provisional agreement to renegotiate
BRL850 million owed with the federal power company was never
signed, reports Business News Americas.

Celg president Jose Paulo Loureiro recalled that the two
companies have reached a provisional agreement at the end of last
year. However, the new administration never signed it believing
that the deal is not beneficial for Celg. The administration
thinks that interest rates and financial adjustments demanded are
"exorbitant" and higher than those charged by commercial banks,
Loureiro related.

The executive indicated that the agreement with Eletrobras is
critical for Celg, which is looking to renew a line of credit
with the federal company worth some BRL100 million to be used for
investments in expanding the network and carrying out
maintenance, which have been on hold for some time, the executive
said.

Celg continues to lose around BRL15 million a month from its
operations, because it must pay for electric power and related
taxes up front but then does not receive payment from the Goias
state municipalities and some public entities on time, Loureiro
explained.

Celg has 5,300km of transmission lines, 104,500km of distribution
network and 3.7 million users.

CONTACT:  COMPANHIA ENERGETICA DE GOIAS (CELG)
          Rua 2 - Qd. A-37 - Edificio Gileno Godoi
          Jardim Goias - Goiania - Goias
          Brazil
          CEP: 74805-180
          Phone:  (0XX62)   243-2222
          Fax:  (0XX62) 243-2100
          Email: celg@celg.com.br
          Home Page: www.celg.com.br/
          Contact:
          Jose Walter Vazquez Filho,  President
          Phone: (0XX62) 243-1001
          Samuel Albernaz, Administrative Director
          Phone: (0XX62) 243-1031
          Javahe de Lima, Economic-Financial Dir./Investor
                                                  Relations
          Phone: (0XX62) 243-1041

CREDITOR:  CENTRAIS ELETRICAS BRASILEIRAS S.A. - ELETROBRAS
           Avenida Presidente Vargas 409, 13 Andar
           20071-003 Rio de Janeiro Brazil
           Phone: (21) 2514-5151
           Fax: +55-21-2242-2697
           Home Page: http://www.eletrobras.gov.br
           Contacts:
           Cladio da Silva avila, President
           Jose Alexandre Nogueira de Resende, Director of
                                 Financial and Market Relations

           Investor Relations Division
           Phone: (0XX21) 2514-6207 / 2514-6333
           Av. Presidente Vargas, 409 - 9  andar
           20071-003 - Rio de Janeiro - RJ
           Email: arlindo@eletrobras.gov.br


CEMIG: Mirant Completes Sale Of 3.6% Stake
------------------------------------------
US power company Mirant completed the sale of its 3.6% stake in
Brazil's Minas Gerais state integrated power company Cemig on
December 30, reports Business News Americas.

Mirant sold the stake for a "nominal amount," the Company said
without revealing specifics about the buyer. Mirant originally
acquired the Cemig stake as part of a broader partnership with
US-based AES and Brazil's Opportunity.

The sale "will result in a fourth- quarter write-off of
previously disclosed, deferred currency losses of approximately
US$84 million after tax," Mirant said.

The sale of the stake is part of Mirant's strategic restructuring
plan, which has seen it exit a number of operations around the
world except in the Caribbean. "Mirant has gained a critical mass
in these markets, and there is strong regulatory and customer
support there," Mirant CEO Marcy said in a conference call.

CONTACT:  Cia Energetica de Minas Gerais (Cemig)
          Registered Office
          Edificio Julio Soares
          Avenida Barbacena, 1200
          Sto Agostinho
          30123-970 Belo Horizonte - MG
          Brazil
          Tel  +55 31 3349-2111
          Fax  +55 31 3299-4691
          URL: http://www.cemig.com.br
          Contact:
          Djalma Bastos de Morais, Chairman


INEPAR: Strikes Sale Agreement With Gerdau
------------------------------------------
Brazil's Inepar Energia informed the securities regulator CVM
that it has sold its 30% stake in the Dona Francisca Energetica
hydro power concessionaire to Brazilian steel group Gerdau,
relates Business News Americas.

According to the terms of the agreement, Gerdau will pay BRL20
million (US$6.09mn) up front - BRL15.5 million in cash and the
remainder could be paid in goods and services - and will also
cover Inepar's share of debts owed to wholesale market
administrator MAE by Dona Francisca. The deal still needs the
approval of the country's electric power regulator Aneel.

Inepar has previously announced that it wants to sell some of its
assets as part of a restructuring process. Last year, Inepar sold
its 3.48% stake in the Machadinho hydroelectric power plant.

CONTACT:  INEPAR S/A - INDUSTRIA E CONSTRUCOES
          Av. Juscelino K. de Oliveria, 11400
          81450-900 Curitiba Parana Brasil
          Phone: 55-41-341-1487
          Fax: 55-41-341-1271
          Home Page: www.inepar.com.br/
          Contact:
          Mauro Rezende Lopes (Operacoes em Telecom)
          Phone: +55 (41) 350-7564
          E-mail: maurotel@inepar.com.br



===========
M E X I C O
===========

AHMSA: Final Court Probe Results Expected This Month
----------------------------------------------------
Mexico's federal fiscal and administrative court is set to
conclude this month various investigations into the tax and debt
situation of financially embattled steelmaker AHMSA, reports El
Financiero newspaper.

Reportedly AHMSA, which has been in a form of bankruptcy
protection since May 1999, owes the country's finance ministry
some MXN900 million (about US$90mn) on top of the US$1.87 billion
it owes banks.

AHMSA has repeatedly come under attack by banks for not being
serious about resolving its debt situation. The Company is
expected to submit in February a new financial restructuring plan
to creditor banks.

AHMSA earlier submitted a restructuring plan but creditors
rejected it, deeming the offers insufficient. Under the plan,
AHMSA's controlling group GAN offered to give the financial
institutions 40% of the Company in return for writing off US$1.3
billion of the debt while GAN would maintain 50.1% of shares and
the other US$500 million in debt would be paid off over 15 years.

With the new plan, company officials say they aim to avoid the
mistake of offering the "same deal" to all banks.

CONTACT:  AHMSA
          Prolongacion B. Juarez s/n,
          Monclova , Coahuila 25770
          Mexico
          http://www.AHMSA.com
          Phone: +52 86 33 81 72
          Fax: +52 86 33 65 66
          Contacts:
          Alonso Ancira Elizondo, CEO, Vice Chairman, Pres/CEO
          Jorge Ancira Elizondo, Chief Financial Officer
          Manuel Ancira Elizondo, Chief Operating Officer


CORPORACION DURANGO: Fitch Downgrades Ratings To 'C'
----------------------------------------------------
Fitch Ratings has downgraded the unsecured corporate foreign and
local currency ratings of Corporacion Durango (Durango) to 'C'
from 'B+'. In conjunction with this rating action, the ratings of
the senior unsecured notes due in 2003, 2006, 2008 and 2009 have
been downgraded to 'C' from 'B+', which signals that a default is
imminent. The outstanding amount of debt for these notes is $18.2
million, $301.7 million, $10.3 million and $175 million,
respectively. The Rating Watch on the company and these notes
remains Negative.

During December 2002, Durango ceased to make interest and
principal payments with banks and HG Estates. On December 18,
2002, the aggregate amount of these payments exceeded $25
million. At this time, those lenders have not delivered a notice
of acceleration of their loans to Durango. If they did, it could
lead to an event of default for the notes.

On January 15, 2003, interest payments totaling approximately $12
million come due on the 2009 notes and on February 1, 2003
approximately $21 million of interest payments come due on the
2003, 2006, and 2008 notes. While the company has not commented
on whether it will make these payments, Fitch believes that it
will not be able to make payment on the notes and that it will
not cure this situation within the 30 day grace period. As a
result, an event of default is likely to be triggered on February
15, 2003.

Durango finished the period ended September 30, 2002 with $835
million of total debt, $30 million of cash and marketable
securities and $133 million of short-term debt. During the first
nine months of 2002, the company generated $95 million of EBITDA,
a drop from $122 million during a similar period in 2001.
Durango's weak financial performance during 2002 was a result of
lower prices for its products and stagnant demand.

To counteract these problems and to reduce its debt, Durango has
sought to divest more than $150 million of assets. To date, the
company has not been successful in selling any of its asset
sales. Given the distressed nature of the company at this time,
it is not likely that the company will achieve its target during
2003 either.

Durango has retained Rothschild Inc. and PricewaterhouseCoopers
to advise it about debt restructuring alternatives. Holders of
the notes, which are at the holding company, are currently
subordinate to about $160 million of secured debt or debt at
operating companies. Consequently, they face the risk of a
reduction in principal amount and a lowering of the coupon.

Looking forward, Fitch Ratings continues to be concerned about
the inability of the company to project the cash flow generating
capacity of its business, as reflected by management's
substantial downward revision of the company's midpoint EBITDA at
the beginning of November, as well as the financial health of the
company's customers in Mexico, as reflected by the number of days
receivables are outstanding. Furthermore, in recent years, a
substantial number of export-related manufacturing (maquiladora)
facilities have been shuttered in Mexico, as a result of the
decision by multinationals to relocate these operations in Asia.
This could also hinder a rebound in the company's performance.

CONTACT:  Fitch Ratings
          Joe Bormann, CFA 1-312-368-3349, Chicago
          Roberto Guerra, Adriana Beltran 011-52-818-335-7179
          Victor Villarreal 011-52-818-335-7239, Monterrey
          James Jockle 1-212-908-0547, New York, Media Relations


GRUPO TMM/TFM: S&P Lowers Ratings on Transport Concerns
-------------------------------------------------------
Standard & Poor's Ratings Services said Friday it lowered its
senior unsecured debt and corporate credit ratings on
transportation concern Grupo TMM S.A. (TMM) to 'CC' from 'B+'.
The ratings have been removed from CreditWatch, where they were
placed on Oct. 10, 2002, due to concerns about TMM's near-term
liquidity.

The outlook is negative.

At the same time, the corporate credit and senior unsecured debt
ratings on TMM's railroad subsidiary, TFM S.A. de C.V. (TFM) were
lowered to 'B+' from 'BB-'. The outlook was changed to negative
from stable. TMM's consolidated debt totals $438 million as of
Sept. 30, 2002.

"The downgrade on TMM reflects the company's reduced liquidity
and weak financial performance. The rating action also considers
the company's announcement that it launched an exchange offer of
its outstanding 9 1/2% notes due 2003 and 10 1/4% notes due 2006,
for 10 3/4% senior notes due 2010 for a combination of about $380
million in new securities," stated Standard & Poor's credit
analyst Manuel Guerena.

TMM has stated that its existing cash reserves and cash flow
generation will not be sufficient to repay the 2003 notes at
maturity and meet other obligations, if it is unable to complete
the exchange. In addition, the company has indicated that if the
exchange offer for the 2003 notes is not completed, it would need
to find a source of refinancing to repay the 2003 notes or sell
assets to generate cash to satisfy its obligations.

Standard & Poor's views this transaction as a distressed exchange
under its corporate criteria, and, therefore, upon completion,
the transaction would be treated as a default under these
criteria. Standard & Poor's will then reassess TMM's corporate
credit and its senior unsecured debt ratings.

The downgrade of TFM reflects the company's link with TMM
resulting from a shared management and common long-term strategic
objectives. However, TFM is partially isolated from TMM's
liquidity situation because of Kansas City Southern Industries
Inc.'s 49% voting stake in TFM's holding company, Grupo TFM S.A.
de C.V., and the existing covenants in TFM's bond indentures,
which currently limit dividend payments to TMM.

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



=======
P E R U
=======

EMPRESAS LUCCHETTI: Shuts Down Plant On Eviction Order
------------------------------------------------------
Empresas Lucchetti SA, a pasta maker owned by Chile's Luksic
family, failed to block an order issued by the city government of
Lima last month to close a plant in the city due to environmental
concerns, reports Bloomberg.

Just a week before city officials were due to impose the
eviction, Lucchetti shut down production at the US$40-million
plant. But, according to Edmundo Eluchans, a Lucchetti lawyer in
Santiago, administrative work would continue for an undetermined
period.

"Closing a plant isn't like pressing a switch," Eluchans said.
"We are closing work contracts and accounts payables, receivables
and debt to the financial system."

Lucchetti, which lost US$5.4 million in the first nine months of
2002, is seeking compensation before a World Bank arbitration
court, claiming it is a victim of discrimination. Lucchetti said
last July that an eviction could hamper efforts to repay debt.

CONTACT:  EMPRESAS LUCCHETTI S.A.
          2600 Av Vicuna Mackenna
          Comuna de Macul Santiago
          Chile
          Phone: +56 238 2711
                 +56 238 6592
          Home Page: http://www.lucchetti.cl/



=================================
T R I N I D A D   &   T O B A G O
=================================

BWIA: CEO Forecasts Profit Despite Long Odds
--------------------------------------------
BWIA President and Chief Executive Conrad Aleong said that the
airline has a plan to produce profit this year, according to a
report by the Barbados Advocate. The report did not reveal the
details of the said plan.

Aleong said, "You will hear us coming back to shareholder value.
Our shareholders have waited too long to get a return and get
dividends." The report indicated that BWIA expects to operate in
the black this year.

The airline has three weeks left to implement a plan to save
US$1.4 million per month in order to qualify itself to receive
state funds.

In a press conference on Monday, Aleong also said that he favors
cooperation among the regional airlines rather than the proposed
merger.

However, the tension between the United States and Iraq may
affect the recovery of the troubled airline. BWIA spent US$34
million on fuel in the previous year. The increase in fuel
prices, triggered by the conflict between the two countries may
add to BWIA's obstacles to attaining the savings goal.

CONTACT:  BRITISH WEST INDIES AIRWAYS
          Phone: + 868 627 2942
          E-mail: mailto:mail@bwee.com
          Home Page: http://www.bwee.com/
          Contacts:
          Conrad Aleong, President and CEO (Trinidad)
          Beatrix Carrington, VP Marketing and Sales (Barbados)
          Paul Schutz, CFO (Trinidad)


BWIA: Shareholders File Suit Over IPO Disclosures
-------------------------------------------------
Shareholders of Trinidad and Tobago flag carrier BWIA filed
charges against the carrier for allegedly misrepresenting its
December 2000 Initial Public Offering (IPO) of shares, reports
the Trinidad Express. The case was filed just a few days before
the deadline for legal challenges to the IPO under the Securities
Act.

The Company is yet to respond to the allegations. BWIA corporate
communications director Clint Williams said, "We prefer not to
comment on something that is before the courts."

The shareholders, led by Demetra Romero are asking for a refund
to the money they had invested in the airline's operations. They
also want to know if the December 2000 IPO was not underwritten.

Furthermore, they want BWIA to disclose the basis for setting the
share price of US$7.85 in December 2000. The said shares declined
to US$2.80 within six months, then to the current low of US$2.25.

They also want to know BWIA's basis for promising a net profit of
US$9.2 million in its 2001 prospectus, while losing US$694,000 in
the said year.

The shareholders have several other demands, including a review
of all contracts BWIA and its subsidiaries, partners and
affiliates had entered into.

The shareholders asks for up to date management accounts of BWIA
and its associates for the years 1995 to 2002, including details
of all accounting items, according to the report. They are also
asking whether the airline has borrowed money, how much, why,
from whom and at what rates of interest.

According to the report, the shareholders also want to know the
meaning of a reported statement by BWIA chief executive officer
Conrad Aleong that the reduction in share value was due to the
imbalance of supply and demand and the flooding of the market
with shares by shareholders of pre-1995.


CARONI LTD: Union Leader Slams VESP
-----------------------------------
Rudy Indarsingh, President General of the All Trinidad Sugar and
General Workers Trade Union (ATSGWTU) said that the VESP was "a
sham", reports the Trinidad Guardian. Indarsingh's comment came
after industrial relations expert Percy Cezair confirmed that
workers of troubled company Caroni, who accepted the VESP, will
have to wait until they are 65 years old to get their pension.

Indarsingh also said that the government has deliberately
neglected informing the workers of the age requirement before
they can avail of the pension benefits.

Mr. Cesair said that it is normal for pensions to be paid at
retirement age, and that nothing can be done about the payment of
the pension when it is legally due. He explained that the pension
was valid until the specified time and benefits cannot be paid
out before then.

Workers have a choice: either they take the enhance VESP when it
is offered or stay on in the company and receive a smaller
severance package when he is considered redundant.

Earlier, the union met with the ministerial committee. When asked
about the meeting, Indarsingh said, " "The talks have revealed
nothing new in respect to allaying the concerns or (providing)
information on the restructuring of Caroni."

CONTACT:  Caroni Limited
          Old Southern Main Road, Caroni,
          Trinidad & Tobago
          Phone: (868) 663-1781 or 662-0879
          Fax: (868) 663-1404

          All Trinidad Sugar and General Workers' Trade Union
          Rienzi Complex
          Exchange Village
          Southern Main Road, Couva.
          President: Mr. Boysie Moore-Jones
          General Secretary: Mr. Rudranath Indarsingh
          Tel. 868-636-2354
          Fax. 868-636-3372
          E-mail: atsgwtu@opus.co.tt



=================
V E N E Z U E L A
=================

BANCO DE VENEZUELA: Fitch Lowers Ratings; Outlook Still Negative
----------------------------------------------------------------
In a series of related announcements, Fitch lowered the ratings
of Banco de Venezuela. The Rating Outlook remains Negative.

The ratings affected are:

    --Long-term foreign currency to 'CCC' from 'B';
    --Rating Outlook Negative.
    --Short-term foreign currency to 'C' from 'B';
    --Long-term local currency to 'CCC-' from 'B-';
    --Rating Outlook Negative.
    --Short-term local currency to 'C' from 'B';
    --Individual to 'D' from 'C/D', Rating Watch Negative;
    --Support changed to '5T' from '4T';
    --Long-Term National rating to 'A(ven)' from 'AA(ven)'.


BANCO DEL CARIBE: Ratings Downgraded Following Sovereign Cut
------------------------------------------------------------
In a series of related announcements, Fitch lowered the ratings
of Banco del Caribe. The Rating Outlook remains Negative.

The ratings affected are:

    --Long-term foreign currency to 'CCC' from 'B';
    --Rating Outlook Negative.
    --Short-term foreign currency to 'C' from 'B';
    --Long-term local currency to 'CCC-' from 'B-';
    --Rating Outlook Negative.
    --Short-term local currency to 'C' from 'B';
    --Individual to 'D/E' from 'D', Rating Watch Negative;
    --Support changed to '5T' from '4T';
    --Long-Term National rating to 'A-(ven)' from 'A+(ven)'.


BANCO EXTERIOR: Difficult Operating Environment Pulls Down Rating
-----------------------------------------------------------------
In a series of related announcements, Fitch lowered the ratings
of Banco Exerior. The Rating Outlook remains Negative.

The ratings affected are:

    --Long-term foreign currency to 'CCC' from 'B';
    --Rating Outlook Negative.
    --Short-term foreign currency to 'C' from 'B';
    --Long-term local currency to 'CCC-' from 'B-';
    --Rating Outlook Negative.
    --Short-term local currency to 'C' from 'B';
    --Individual to 'D' from 'C/D', Rating Watch Negative;
    --Support changed to '5T' from '4T';
    --Long-Term National rating to 'A-(ven)' from 'A+(ven)'.


BANCO MERCANTIL: Fitch Lowers Ratings On Possibility Of Default
---------------------------------------------------------------
In a series of related announcements, Fitch lowered the ratings
of Banco Mercantil. The Rating Outlook remains Negative.

The ratings affected are:

    --Long-term foreign currency to 'CCC' from 'B';
    --Rating Outlook Negative.
    --Short-term foreign currency to 'C' from 'B';
    --Long-term local currency to 'CCC-' from 'B-';
    --Rating Outlook Negative.
    --Short-term local currency to 'C' from 'B';
    --Individual to 'D' from 'C/D', Rating Watch Negative;
    --Support changed to '5T' from '4T';
    --Long-Term National rating to 'A(ven)' from 'AA(ven)'.


BANCO OCCIDENTAL: Chaotic Political Environment Prompts Cut
-----------------------------------------------------------
In a series of related announcements, Fitch lowered the ratings
of Banco Occidental de Descuento. The Rating Outlook remains
Negative.

The ratings affected are:

    --Long-term foreign currency to 'CCC' from 'B';
    --Rating Outlook Negative.
    --Short-term foreign currency to 'C' from 'B';
    --Long-term local currency to 'CCC-' from 'B-';
    --Rating Outlook Negative.
    --Short-term local currency to 'C' from 'B';
    --Individual to 'D/E' from 'D', Rating Watch Negative;
    --Support changed to '5T' from '4T'.


BANCO PROVINCIAL: Fitch Lowers Ratings On Worsening Economy
-----------------------------------------------------------
In a series of related announcements, Fitch lowered the ratings
of Banco Provincial. The Rating Outlook remains Negative.

The ratings affected are:

    --Long-term foreign currency to 'CCC' from 'B';
    --Rating Outlook Negative.
    --Short-term foreign currency to 'C' from 'B';
    --Long-term local currency to 'CCC-' from 'B-';
    --Rating Outlook Negative.
    --Short-term local currency to 'C' from 'B';
    --Individual to 'D' from 'C/D', Rating Watch Negative;
    --Support changed to '5T' from '4T';
    --Long-Term National rating to 'A(ven)' from 'AA(ven)'.


BANCO VENEZOLANO: Ratings Cut Amidst Severe Economic Downturn
-------------------------------------------------------------
In a series of related announcements, Fitch lowered the ratings
of Banco Venezolano de Credito. The Rating Outlook remains
Negative.

The ratings affected are:

    --Long-term foreign currency to 'CCC' from 'B';
    --Rating Outlook Negative.
    --Short-term foreign currency to 'C' from 'B';
    --Long-term local currency to 'CCC-' from 'B-';
    --Rating Outlook Negative.
    --Short-term local currency to 'C' from 'B';
    --Individual to 'D' from 'C/D', Rating Watch Negative;
    --Support changed to '5T' from '4T';
    Corp Banca
    --Long-Term National rating to 'BBB+(ven)' from 'A(ven)'.


BANESCO BANCO: Fitch Drops Ratings As Economy Crumbles Further
--------------------------------------------------------------
In a series of related announcements, Fitch lowered the ratings
of Banesco Banco Universal. The Rating Outlook remains Negative.

The ratings affected are:

    --Long-term foreign currency to 'CCC' from 'B-';
    --Rating Outlook Negative.
    --Short-term foreign currency to 'C' from 'B';
    --Individual at 'D/E' Rating Watch Negative from 'D/E';
    --Support changed to '5T' from '4T'.


FITCH NOTES:  The cuts follow the downgrade of Venezuela's
sovereign long-term foreign currency rating to 'CCC+' from 'B',
its long-term local currency (Venezuelan bolivar) rating to 'CCC'
from 'B-' and its short-term foreign currency rating to 'C' from
'B'. The downgrades of the bank ratings reflect the severe
deterioration in the local operating environment, the increased
likelihood of a default or distressed debt exchange by the
banking system's largest borrower -- the government -- and the
increasing possibility that actions motivated by the unsettled
political environment could interfere with the economy's payment
chain.

After operating on a limited schedule for several weeks, the bank
workers' union called for a strike in support of those already
striking in opposition to the government, stating that all banks
would close for two days at the end of this week. However, a
significant number of head-offices and a few bank branches
remained open during Thursday and Friday. While the partial
closure of banks implied some interruption in the payment chain,
it does not, in Fitch's view, constitute an act of default;
nevertheless, the risk of further interruption in banking
activity could increase going forward and could lead to a more
serious disruption of the payment chain, an event that could be
deemed as default to depositors.

The sovereign rating action also reflects the heightened
possibility that the government may choose, or be forced, to
default on or forcibly restructure its exposure with the banking
system. Because of the lack of loan demand in recent years and
mounting government financing needs, mostly funded locally,
Venezuelan banks have built up sizeable portfolios of government
securities (mostly local currency debt) that significantly exceed
the system's equity base (162% as of September 2002) and leave
the banks exposed to payment interruptions which, at minimum,
could put pressure on liquidity, and at worst, leave many banks
facing insolvency.

As Fitch has stated in previous opportunities, the banking system
will continue to be exposed to a growing risk of politically
motivated interference, a risk that will remain in the
foreseeable future.

The lowering of the banks' long-term ratings to a level below the
sovereign reflects the risks outlined above, while the lowering
of the support ratings reflects our belief that potential
interference with the banking system could influence decisions
shareholders may face if their institutions were to require
further support to navigate the months ahead. The lower
individual and national ratings reflect the much higher risk
inherent in the volatile and deteriorated operating environment,
and the likelihood that any recovery could be prolonged. During
2002, the operating environment of Venezuelan banks was affected
not only by a severe economic contraction estimated at around 9%
of GDP but also by a more than 80% currency devaluation and
mounting instability in the money market that resulted in a rise
in interest rates and some liquidity squeezes. That situation has
been exacerbated since December 2002 with mounting political
instability that has resulted in a significant curtailment of
economic activity.

CONTACT:  Fitch Ratings
          Franklin Santarelli, Carlos Fiorillo, +58 212 286 3356
          Peter Shaw, 1-212-908-0553
          Gustavo Lopez-Cortes, 1-212-908-0853
          Agatha Pontiki, 1-212-908-0306
          London Ratings Desk, +44 (0) 20 7417 6300
          James Jockle, 1-212-908-0547 (Media Relations)


CITGO/PDV AMERICA: Fitch Downgrades Ratings; Watch Negative
-----------------------------------------------------------
Fitch Ratings has lowered the senior unsecured debt rating of
CITGO Petroleum Corporation to 'BB-' from 'BBB-'. Fitch has also
lowered the rating on the senior notes of PDV America, Inc. to
'B-' from 'BB+'. CITGO is owned by PDV America, an indirect,
wholly owned subsidiary of Petroleos de Venezuela S.A. (PDVSA),
the state-owned oil company of Venezuela. CITGO and PDV America
remain on Rating Watch Negative.

The downgrades reflect Fitch's heightened concerns with the
financial flexibility of both CITGO and PDV America due to the
general strike in Venezuela, which has severely disrupted the
country's oil exports. Earlier Friday, Fitch downgraded the long-
term foreign currency rating of Venezuela and PDVSA to 'CCC+'
from 'B' and the short-term foreign currency (Venezuelan bolivar)
rating of Venezuela to 'C' from 'B'.

As a result of the strike, CITGO has been forced to find
alternate sources for much of the crude supplied by PDVSA. CITGO
typically purchases approximately 50% of its crude needs from
PDVSA under long-term contracts. CITGO has been successful
acquiring alternate crudes and other feedstocks to maintain
refinery operations. However, spot market terms have increased
working capital requirements and given the lowered credit ratings
of CITGO related entities, additional working capital
requirements are possible.

Near term obligations as well as a rating trigger in the
company's trade accounts receivable program could significantly
reduce CITGO's liquidity. Unless CITGO achieves a waiver, Fitch's
downgrade will result in termination of the accounts receivable
program. In mid-December, CITGO entered into a new $520 million
credit facility, split into a $260 million three-year facility
and a $260 million 364-day revolver. Concerns over the situation
in Venezuela, however, have limited CITGO's ability to enter the
capital markets for a planned bond issuance in the fourth quarter
of 2002.

The CITGO downgrade and the more severe downgrade to the senior
notes of PDV America are also based on the deteriorating
creditworthiness of PDVSA and Venezuela. The $500 million of
senior notes mature in August 2003 and are supported by Mirror
Notes issued by PDVSA and held by PDV America. The senior notes
and Mirror Notes have identical terms and conditions such that
the interest income PDV America receives from PDVSA on the mirror
notes pays the interest on the senior notes. In an absence of a
return to normal oil operations, Fitch has significant concerns
with the ultimate parent's ability and willingness to pay the
maturity of the notes. In 1998 and 2000, dividends from CITGO
were ultimately used to pay the $250 million tranches that
matured in each of those years. Given CITGO's current financial
situation, CITGO is not expected to pay any dividends to PDVSA to
support PDV America's senior notes.

The situation in Venezuela remains highly volatile. Although
Fitch expects CITGO to maintain operations, further deterioration
in CITGO's financial position or the ultimate shareholders credit
quality could result in additional downgrades.

CITGO is one of the largest independent crude oil refiners in the
United States with three modern, highly complex crude oil
refineries and two asphalt refineries with a combined capacity of
756,000 barrels per day. The company also owns approximately 41%
interest in LYONDELL-CITGO Refining L.P. (LCR), a limited
liability company that owns and operates a 265,000-barrel per day
(BPD) crude oil refinery in Houston, Texas. CITGO markets refined
products through approximately 13,400 independently owned and
operated retail sites.

CONTACT:  Fitch Ratings
          Bryan Caviness, 312/368-2056
          Alejandro Bertuol, 212/908-0393
          Matt Burkhard, 212/908-0540 (Media Relations)


HOVENSA: Fitch Keeps Rating Watch Negative, 'BBB-' Debt Rating
-------------------------------------------------------------
Fitch Ratings has recently reviewed the 'BBB-' senior secured
debt rating of HOVENSA LLC (HOVENSA), and has maintained the
Rating Watch Negative. Fitch placed the rating on Rating Watch
Negative on December 20, 2002 as a result of the uncertainty
surrounding the current political crisis in Venezuela that has
resulted in the continuing national strike which commenced on
December 2, 2002. The rating applies to HOVENSA's $396 million
senior secured term loan due 2008, $150 million senior secured
reducing bank revolver due 2007 and $126.8 million senior secured
tax-exempt bonds due 2021. HOVENSA is a limited liability company
which owns and operates a crude oil refinery in the U.S. Virgin
Islands. The refinery, which has the capacity to process up to
490,000 barrels per day (bpd) of crude oil, is indirectly owned
50% by Amerada Hess Corporation (Hess) and 50% by Petroleos de
Venezuela (PDVSA). In related news, Fitch downgraded Friday the
foreign currency sovereign rating of Venezuela to 'CCC+' from 'B'
(for more information see Fitch's press release 'Fitch Downgrades
Venezuela's Foreign Currency Sovereign Rating to 'CCC+'). As a
result of the sovereign downgrade, Fitch's senior unsecured
rating on PDVSA was downgraded 'CCC+', given it is wholly owned
by Venezuela.

As detailed in the December 20, 2002 Fitch press release 'Fitch
Places HOVENSA's Senior Secured Debt on Rating Watch Negative',
the Rating Watch Negative status reflects the suspension of crude
oil and feedstock supply from PDVSA and related entities as a
result of the national strike in Venezuela. PDVSA is
contractually obligated to supply approximately 60% of HOVENSA's
crude feedstock requirement under two crude oil supply agreements
(155,000 bpd of Mesa and 115,000 bpd of Merey). While the ability
of PDVSA to honor its crude supply obligations is a key
determinant of HOVENSA's credit quality, the refinery does have
the operating flexibility to process a wide variety of crude
oils. Since PDVSA's declaration of force majeure under its crude
supply agreements in early December, HOVENSA has been successful
in acquiring substitute crude oils from a wide variety of
sources. While the refinery is not presently operating at full
capacity, the current run rate primarily reflects refinery
economics rather than ability to secure crude supply and HOVENSA
believes it can continue to source sufficient crude supply over
the longer term, if necessary. However, the refinery's optimal
performance is designed for the Venezuelan crude specifications,
and as such, alternative crude slates may adversely impact
HOVENSA's overall economics.

Fitch believes HOVENSA's current liquidity position (comprised of
cash on hand, undrawn availability under the revolver and the six
month debt service reserve) is adequate to meet anticipated
financial obligations over the near term. The more critical
concern is whether a prolonged crude supply disruption will
adversely impact the refinery's planned capital expenditure
program (Clean Fuels Program) needed to comply with recently
enacted low sulfur gasoline and diesel regulations. Fitch is
concerned with the significant estimated cost of the Clean Fuels
Program (approximately $475 million planned to be spent over the
next three years) and the potential strain on liquidity. While
HOVENSA has some flexibility to defer the timing of the program
without jeopardizing its ability to meet the implementation dates
of the new Environmental Protection Agency (EPA) standards,
however Fitch is concerned that a significant delay in the timing
of the Clean Fuels Program could hinder the refinery's ability to
sell into the U.S. market.

HOVENSA's debt is currently supported by completion guarantees
from the sponsors, which will remain in place until financial
completion of the delayed coker project is achieved, mitigating
default risk to the senior secured lenders. Since the sponsor
guarantees are several, lenders are not immune from PDVSA's
deteriorating financial situation. However, Fitch believes
HOVENSA is a strategically important asset to Hess and that Hess
would likely provide continuing financial support through
financial completion to ensure the refinery's viability. As such,
Fitch views Hess's committed sponsorship as a key factor in
maintaining the current HOVENSA debt rating. Fitch rates the
senior unsecured debt of Hess 'BBB'.

Fitch will continue to monitor the situation in Venezuela and at
PDVSA carefully and assess the impact upon HOVENSA. As signified
by the Rating Watch Negative, a downgrade of the HOVENSA debt
rating could be warranted if various factors, including, the
refinery's ability to source alternative crude and/or its
liquidity position, were to adversely change.

CONTACT:  Fitch Ratings
          John W. Kunkle, CFA 312/606-2329
          Caren Y. Chang, 312/368-3151
          Bryan Caviness, 312/368-2056, Chicago
          Alejandro Bertuol, 212/908-0393, New York
          Media Relations:
          James Jockle, 212/908-0547, New York


PDVSA: Forecasts Additional Layoffs
-----------------------------------
After firing 300 Petroleos de Venezuela SA employees, Venezuelan
President Hugo Chavez terminated another 700 workers from the
state oil monopoly Friday in a bid to break a 40-day-old strike
intended to oust him, reports AP.

Venezuela's opposition began a general strike December 2 to
demand that Chavez resign and call elections. But the
opposition's hopes are seen very unlikely to happen due to lack
of funding and disorganization in the country's elections
council.

"Technically, logistically, it's impossible to hold the
referendum on February 2," said Romulo Rangel, one of five
council directors. "There is no clear leadership within the
board, which means nobody is leading the activities."

Chavez says Venezuela's constitution permits only a binding
referendum on his presidency halfway into his six-year term, or
August.

The strike has paralyzed the world's fifth-largest oil exporter,
where at least 30,000 of the state company's 40,000 workers are
off the job.

Chavez has tried to jump-start oil production. Crude output is
estimated at about 400,000 barrels a day, compared with the pre-
strike level of 3 million barrels. Exports, normally 2.5 million
barrels a day, are at 500,000 barrels. Venezuela is able to
export more than it produces because it has been shipping
stockpiled oil.


PDVSA/EDC: Fitch Lowers Ratings as Economic Turmoil Continues
-------------------------------------------------------------
Fitch Ratings, the international rating agency, has downgraded
the senior unsecured foreign currency ratings of Petroleos de
Venezuela S.A. (PDVSA) and C.A. La Electricidad de Caracas S.A.
(EDC) to 'CCC+' from 'B'. Fitch also downgraded EDC's senior
unsecured local currency rating to 'CCC+' from 'BB-'. All of the
assigned ratings have negative outlooks.

The rating actions follow Fitch's downgrade of the Bolivarian
Republic of Venezuela's long-term foreign currency rating to
'CCC+' from 'B' and its long-term local currency (Venezuelan
bolivar) rating to 'CCC' from 'B-'. The ratings remain on
negative rating outlook. The sovereign actions reflect pressures
on government finances and international reserves due to the
severe disruption of the economy, especially the oil sector, as a
result of the national strike.

CONTACT:  Fitch Ratings
          Alejandro Bertuol, 1-212-908-0393
          Jason Todd, 1-312-368-3217
          Matt Burkhard, 1-212-908-0540 (Media Relations)


PDVSA FINANCE: Fitch Cuts Ratings To 'BB-'; On Watch Negative
-------------------------------------------------------------
Fitch Ratings has downgraded PDVSA Finance to 'BB-' from 'BBB'
due to the deterioration in performance of the transaction caused
by the prolonged strike in Venezuela and the sovereign downgrade
of the foreign currency obligations. This downgrade follows
Fitch's downgrade of the foreign currency obligations of the
Bolivarian Republic of Venezuela to 'CCC+' from 'B'. In addition
to the downgrade, the transaction will be on Rating Watch
Negative in order to reflect the uncertainties surrounding the
resumption of oil production and exports.

While Fitch believes the current environment in Venezuela is not
sustainable, the risks impacting the securitization have
significantly increased. The prolonged strike, disruptions in
exports, and the operational disruptions within PDVSA's
traditional trading and accounting operations have contributed to
this increase in risk. While the government continues to attempt
to increase production, Fitch estimates current production is
well below the official 1.2 million barrels per day. Fitch
estimates December total exports from PDVSA could be as low as
$100-$150 million, which is less than 10% of historical levels.

In a worst case scenario, the February 15 payment may have to be
covered by the liquidity reserve and then, the May 15 payment
would come under question. Furthermore, if the liquidity reserve
is used, it must be replenished within seven business days from
the February 15 date in order to prevent a technical default. The
more likely scenario would be that PDVSA or PDVSA Finance makes a
direct payment to the fiscal agent on February 15. Although not
confirmed, company officials have stated that offshore
collections amounting to more than $300 million have been set
aside and would be used to make the upcoming February payment.
Using these collections or any other PDVSA funds would extend the
event horizon at least another 3-6 months, which would allow
considerable breathing room for the effects of the strike to
dissipate.

If the strike continues and exports remain at these levels, then
the transaction will be in jeopardy of breaching certain
covenants that are based on the creation and collection of
receivables generated from the sales of this heavy crude to the
designated customers. The Debt Service Coverage test of 4:1 is
based on a rolling three-month average of collections and since
collections lag exports by 30-45 days and were significant during
November and December, this should not trigger any earlier than
March 1. Additionally, cash contributions from PDVSA Finance or
PDVSA can be used to calculate the collection amount in order to
satisfy the covenant.

On January 9, 2003 PDVSA announced that it will attempt to sell
its crude and products exclusively through Miami-based Pepex.
This is being done in an attempt to restore the trading functions
of PDVSA and by-pass the traditional method of trade, which
historically has gone through PDVSA-Petroleo y Gas (PDVSA-P&G).
It is important to note that Pepex will only serve as a marketing
entity and the sales will continue to be legally sold through
PDVSA-P&G and therefore receivables will continue to be generated
by PDVSA-P&G.

While there are a variety of scenario's that could take place,
even in the most optimistic of these, production levels and
export levels in the near term will continue to be depressed.
Fitch estimates that full production ramp up would take between
30-60 days and the heavy crude operations would be even longer.
Considering this, heavy crude exports will remain depressed.
However considering current prices, the 4x's debt service
coverage test can be met with just 25-30% of historical exports.
Fitch will continue to monitor the impacts of the strike and the
deterioration in the credit quality of the sovereign and will
take further rating action if we deem necessary.

CONTACT:  Fitch Ratings
          Gregory J. Kabance 1-312-368-2052, Chicago
          Alejandro Bertuol 1-212-908-0393, New York
          Matt Burkhard 1-212-908-0540, New York, Media Relations


PDVSA FINANCE: S&P Lowers Senior Unsecured Notes Ratings
--------------------------------------------------------
Standard & Poor's Ratings Services downgraded Friday its ratings
on the US$3.6 billion and Eur200 million senior unsecured notes
of PDVSA Finance Ltd., a wholly owned subsidiary of Petr¢leos de
Venezuela S.A. (PDVSA), to 'B-' from 'BB' (see list). The notes
remain on CreditWatch, where they were placed Dec. 12, 2003.

The rating action reflects the heightened risk of default due to
the ongoing strike that has crippled the oil industry in
Venezuela and PDVSA Finance's ability to service its debt. The
current rating on the notes reflects the funded liquidity account
available to protect investors at least through the company's
next debt service payment on Feb. 16, 2003.

While the liquidity account, which is fully funded for the amount
of this payment and under control of the New York Fiscal Agent,
is available to cover that payment and structural enhancements
are still in place to prevent sovereign or corporate interference
with that payment, both the ability to generate and export oil
and PDVSA's willingness to allow much needed export revenues to
be trapped offshore have been severely affected by the strikes.

Standard & Poor's is concerned with the ability and willingness
of PDVSA Finance to make subsequent debt service payments as long
as PDVSA's operations remain hampered by its striking workers.
After the February payment, PDVSA Finance's next debt service
payment is in May 2003. While PDVSA Finance has indicated that is
has adequate funds in its collection account for the February
payment, these funds are not restricted and could be distributed
to PDVSA assuming that various covenants are not breached.

PDVSA Finance currently is in compliance with all covenants,
however, there is still the risk of an eventual event of default
due to a covenant violation, including one triggered by the
company's low export volumes.

If the liquidity account is used to make the February payment and
PDVSA Finance does not replenish the account within seven days,
an event of default will be triggered. Investors have the option
at that time of declaring an acceleration of the notes. If an
acceleration event is declared, 100% of all collection deposited
into the offshore account will be used to pay bondholders. If,
however, funds in the liquidity account are not used to make the
February debt service payment, then a payment default in May
would be unlikely as the liquidity account would remain funded.

Standard & Poor's also is concerned about PDVSA's ability to
restore its operations, which could result in diminished coverage
ratios and strained liquidity for PDVSA Finance. Standard &
Poor's believes that restoring PDVSA's production could require
several months and substantial investment, but precise estimates
are difficult at this time given the operational disarray at
PDVSA.

Standard & Poor's notes that the May 2003 debt service payment
could be serviced with only approximately five to six days of
exports based on prestrike volumes (approximately 1.6 million
barrels per day) and prices (approximately US$23.00 per barrel)
of exports to the U.S. (80% of which must flow through the PDVSA
Finance collection accounts). High political uncertainty in
Venezuela and ramp-up requirements make it difficult to assess
whether there will be even the partial resumption of meaningful
export volumes by April, which would be required to provide
enough cash flow to service the notes. Standard & Poor's also
believes that PDVSA and the sovereign's sharply weakened
financial condition has raised the likelihood that even once
exports begin to resume, there may be cash flow diversion from
the structured arrangements (this risk is exacerbated by the fact
that most of the export volume will initially go to Citgo
Petroeum Corp., the U.S. refiner and marketer that is 100%
controlled by PDVSA, who purchased approximately 25% of prestrike
U.S. export volumes).

RATINGS LOWERED AND REMAINING ON CREDITWATCH
PDVSA Finance Ltd.

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

ANALYSTS:  Nancy Gigante Chu, New York (1) 212-438-2429
Bruce Schwartz, CFA, New York (1) 212-438-7809


CERRO NEGRO: Fitch Drops Debt Ratings To `B'
-------------------------------------------------
Following the recent rating downgrade of the Bolivarian Republic
of Venezuela's foreign currency rating to 'CCC+' from 'B', Fitch
Ratings downgraded the senior secured debt ratings of Cerro Negro
Finance, Ltd., a PDVSA-related heavy oil project, to `B' from
`BB+'

The rating downgrade applies to the following debt securities:

    --US$200 million bonds due 2009;
    --US$350 million bonds due 2020;
    --US$50 million bonds due 2028.


(See Fitch notes below for explanations)


HAMACA: Fitch Cuts Ratings On $1.1B Of Loans
--------------------------------------------
Following the recent rating downgrade of the Bolivarian Republic
of Venezuela's foreign currency rating to 'CCC+' from 'B', Fitch
Ratings downgraded the senior secured debt ratings of Petrolera
Hamaca, S.A. (Hamaca), a PDVSA-related heavy oil project, to `B'
from `BB+'

The rating downgrade affects total senior project loans of US$1.1
billion, consisting of:

    --US$627.8 million senior agency loan due 2018;
    --US$470 million senior bank loan due 2015, borrowed on
      sssdszs a several (not joint) basis 30% by Corpoguanipa,
      S.A., a subsidiary of PDVSA, and 70% by Hamaca Holdings
      L.L.C.

(See Fitch notes below for explanations)


PETROZUATA FINANCE: Fitch Lowers Ratings Following Sovereign Cut
----------------------------------------------------------------
Following the recent rating downgrade of the Bolivarian Republic
of Venezuela's foreign currency rating to 'CCC+' from 'B', Fitch
Ratings downgraded the senior secured debt ratings of Petrozuata
Finance Inc., a PDVSA-related heavy oil project, to `B' from
`BB+'

The rating downgrade applies to the following debt securities:

    --US$300 million series A bonds due 2009;
    --US$625 million series B bonds due 2017;
    --US$75 million series C bonds due 2022.

(See Fitch notes below for explanations)


SINCOR: Fitch Doubts Ability To Maintain Normal Operations
----------------------------------------------------------
Following the recent rating downgrade of the Bolivarian Republic
of Venezuela's foreign currency rating to 'CCC+' from 'B', Fitch
Ratings downgraded the debt ratings of Sincrudos de Oriente
Sincor, C.A. (Sincor), a PDVSA-related heavy oil project, to `B'
from `BB+'. The downgrade affects US$1.2 billion senior bank
loans borrowed by the sponsors of Sincor Finance Inc.

(See Fitch notes below for explanations)


FITCH NOTES: Cerro Negro, Hamaca, Petrozuata, and Sincor -- the
four strategic associations -- are involved in the development of
the country's extra heavy crude oil reserves. Debt holders at
each project solely rely on the ability of the project to
generate sufficient cash flows from operations to meet scheduled
debt service obligations. Each project's revenues are largely
derived from the sale of syncrude exports produced at the
strategic associations domiciled in Venezuela.

The rating actions reflect the inability of the four heavy oil
projects (Petrozuata, Cerro Negro, Sincor and Hamaca) to maintain
normal operations due to the disruption of activities in
Venezuela's oil sector. Since early December, the prolonged
national strike has significantly curtailed operations of
Petroleos de Venezuela S.A. (PDVSA). Operations at the four
strategic associations rely exclusively on critical raw material
inputs from PDVSA. Due to the lack of gas supply from PDVSA and
interruptions to Venezuela's oil exports, the four heavy oil
projects have been shutdown since mid-December. As a result, the
projects have been unable to export and generate oil revenues for
approximately a full month period. If the current situation
remains unchanged and no revenues are generated, each project's
liquidity position required to cover fixed operating expenses
will deteriorate in the coming months. However, the projects
should be able to continue meeting scheduled debt service
obligations over the next several months with funds available
under their respective debt service reserve accounts.

Fitch believes that the supply interruptions experienced by these
projects will remain in place as long as the national strike
continues unabated. The six-week-old strike has effectively shut
down Venezuela's hydrocarbon industry, disrupting crude oil and
derivative product export flows and accentuating the deep
polarization that has characterized the nation's society in
recent months. As a result, the government's capacity to service
its debt has come under increasing pressure, which could
ultimately affect its willingness to do so. While Venezuela's
external debt service capacity appears favorable relative to
similarly rated sovereigns, its ability to meet upcoming
obligations may be limited due to immediate cash flow constraints
caused by the loss of as much as US$30 million per day in revenue
from the national strike that has disrupted oil exports. Fitch's
recent downgrade of the Venezuelan sovereign ratings to 'CCC+'
for the long-term foreign currency rating and 'CCC' for the long-
term local currency rating, both maintain a Negative Rating
Outlook.

The assigned ratings of the four heavy oil projects domiciled in
Venezuela have been higher than the sovereign rating of Venezuela
given the legal and structural features of the related financings
that partially mitigate sovereign risk concerns. Fitch believes
that the sovereign's potential inclination to interfere in these
types of projects is a function of the political and economic
environment within the country. While the four projects'
structure and strategic importance provide substantial
disincentives to the Venezuelan government to interfere, the
potential for such actions would be heightened should the
sovereign's credit quality deteriorate further.

Petrozuata is owned 50.1% by a ConocoPhillips subsidiary and
49.9% by a PDVSA subsidiary. Cerro Negro is owned 41.67% by an
ExxonMobil subsidiary, 41.67% by a PDVSA subsidiary and 16.67% by
a Veba Oel subsidiary. Sincor is owned 47% by a TOTALFinaElf
subsidiary, 38% by a PDVSA subsidiary and 15% by a Statoil
subsidiary. Hamaca is owned 40% by ConocoPhillips subsidiary, 30%
by ChevronTexaco subsidiary, and 30% PDVSA subsidiary. All four
projects are involved in the development of Venezuela's extra
heavy crude oil reserves. Of the four strategic associations,
both Petrozuata and Cerro Negro have achieved financial
completion, releasing their respective sponsor completion
guarantees. Sincor and Hamaca still benefit from the financial
support of the sponsors under their several completion
guarantees.

CONTACT:  Fitch Ratings
          Caren Y. Chang, 1-312-368-3151
          Alejandro Bertuol, 1-212-908-0939
          Carlos Fiorillo, +58-212-286-3356
          Matt Burkhard, 1-212-908-0540 (Media Relations)


* Fitch Cuts Venezuela's Sovereign Foreign Currency to 'CCC+'
-------------------------------------------------------------
Fitch Ratings downgraded Friday the Bolivarian Republic of
Venezuela's long-term foreign currency rating to 'CCC+' from 'B',
its long-term local currency (Venezuelan bolivar) rating to 'CCC'
from 'B-' and its short-term foreign currency rating to 'C' from
'B'. These rating changes reflect pressures on government
finances and international reserves due to the severe disruption
of the economy, particularly the oil sector, as a result of the
national strike. The Rating Outlook remains Negative.

The Venezuelan government's near-term financing outlook has
deteriorated dramatically in the last month, given the loss of as
much as US$30 million per day in revenue due to the national
strike that has spread to the oil sector. The recent loss of oil
revenues combined with a reduction in non-oil tax revenues could
cause the government to experience financing difficulties as
early as March of this year. Fitch estimates that the government
could have a financing gap as high as 7% of GDP in 2003, which
authorities will have to close by reducing the deficit, securing
additional finance, or completing further debt exchanges. Without
a return to economic normalcy, a fiscal adjustment or substantial
external financial support (which would likely require
improvements in the political situation as well as sound
macroeconomic policies), the Venezuelan government could seek a
distressed debt exchange with domestic institutions or even a
default on a broad range of its debt obligations.

While Venezuela's external debt service capacity appears
favorable relative to similarly rated sovereigns, its ability to
meet upcoming obligations may be limited due to immediate cash
flow constraints. Venezuela currently holds approximately US$14.5
billion (including assets in the macroeconomic stabilization
fund, the FIEM) in international reserves, against US$4.3 billion
in sovereign external debt service. Furthermore, at 148% (not
including assets in the FIEM), Venezuela's external liquidity
ratio currently exceeds the 104% median of 'B/C/D' rated
countries, however, the liquidity ratio could easily fall below
100% by year-end depending on the duration of the strike.
Including an estimate for the loss of revenue due to the halt in
oil exports, Venezuela's expected current account surplus
position in 2003 could still cover about half of its external
amortizations and stock of short-term external debt this year,
which Fitch estimates at about US$6.6 billion. Yet the
government's capacity to service its debt has come under
increasing pressure, which could ultimately affect its
willingness to do so. In the midst of the current political
crisis, the Venezuelan authorities made approximately US$798.8
million in external bond payments in December 2002; however,
external bond payments due during the first quarter of 2003 total
another US$831.7 million, mostly due in March, which, in
conjunction with sizable domestic bond maturities in the coming
months, could test debt service willingness in the near term.

A peaceful, democratic and constitutional resolution to the
current political crisis, in conjunction with a resumption of
economic activity and oil exports, could stabilize Venezuela's
creditworthiness. Future upgrades would be dependent on a viable
resolution of the political crisis, a resumption of a level of
oil exports consistent with sustainable public finances,
improvements in the government's macroeconomic policy framework,
and a resumption of access to domestic and international capital
markets.

CONTACT:  Fitch Ratings
          Theresa Paiz Fredel, 212/908-0534
          Roger M. Scher, 212/908-0240
          Richard Fox, +44 (0)20 7417 4357
          Matt Burkhard, 212/908-0540 (Media Relations)




               ***********


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
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