TCRLA_Public/050120.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

          Thursday, January 20, 2005, Vol. 6, Issue 14



AGUAS ARGENTINAS: To Initiate Water Concession Talks This Week
CAJA DE VALORES: S&P Releases Favorable Ratings Report
NORTE ASISTENCIA: Court Appoints Trustee for Reorganization
* ARGENTINA: Bond Plummets on Investors' Reaction to Debt Swap


FOSTER WHEELER: Takes $76M Earnings Charge Over Court Ruling


CSN: Moody's Affirms CSN Islands' B1 Foreign Currency Rating


ENAMI: Sells Quebrada Blanca Stake To Help Cover Debt Payment


ECOPETROL: S&P Withdraws Ratings at Company's Request

E L   S A L V A D O R

SEGUROS DE OCCIDENTE: Fitch Withdraws Rating Following Exit


NCB JAMAICA: S&P Affirms Ratings; Outlook Stable


ACCURIDE CORPORATION: Moody's Assigns, Confirms Ratings
GRUPO IUSACELL: Offers Push-to-Talk to Subscribers
ISSSTE: Reform Postponement Spells More Costs for Government


PDVSA: Faces Mounting Pressure to Boost Production
* VENEZUELA: S&P Cuts Currency Ratings over Selective Default

     - - - - - - - - - -


AGUAS ARGENTINAS: To Initiate Water Concession Talks This Week
French utility Suez (SZE) is expected to get into discussions
with Argentine President Nestor Kirchner this week over the
concession for its local water company Aguas Argentinas.
According to Dow Jones Newswires, Kirchner is scheduled to meet
with his counterpart, French President Jacques Chirac, today,
Thursday. While his visit is seen partly as a promotional effort
for Argentina's just-launched US$103 billion debt restructuring,
French-owned utilities - such as Aguas Argentinas - are also
expected to figure prominently into discussions.

Aguas Argentinas was the first privatized utility to reach a
bridge accord with Argentina. The interim accord signed in May
2004 has already expired in December and up to now, there's
still no transitional agreement in place.

With Suez and the government so far apart on the long-term
contract terms, the company is coming under increasing pressure
from shareholders to put an end to the losses coming from
Argentina. Operations in the South American country wiped out
all of Suez's profit in 2002.

An official at ETOSS, Argentina's water regulator, said that the
prospect of Suez leaving Argentina is more serious than in the
past because of the deep disagreement over rate hikes. The
government is proposing a 20% increase, which is a long way from
the 60% Suez is requesting.

The government is absolutely not budging from its proposal
because authorities believe Aguas Argentinas' past actions don't
merit a larger increase, the ETOSS official said.

CAJA DE VALORES: S&P Releases Favorable Ratings Report
CREDIT RATING:                B+/Stable/B

Outstanding Rating(s)
Counterparty Credit        B+/Stable/B

Major Rating Factors


    * As Argentina's central securities depository, Caja de
      Valores S.A. performs a key institutional role for the
      local capital and financial markets
    * Caja de Valores S.A. shows low-risk operations, a strong
      financial profile, and adequate operating safeguards


    * Caja de Valores S.A. has to operate amid the high level of
      systemic risk inherent to Argentina


Ratings on Caja de Valores S.A. (Caja), Argentina's central
securities depository, are based on its critical role and good
track record in serving the country's capital markets. Ratings
also factor in Caja's low-risk operations, strong financial
profile, and adequate operating safeguards. They are limited,
however, by the extremely high level of systemic risk in
Argentina. The counterparty credit ratings assess Caja's ability
and willingness to satisfy its financial obligations in a timely
manner. The assessment includes a review of the operational
risks that might impair Caja's business franchise or financial

Caja's primary responsibility is the safekeeping of government
bonds and corporate securities deposited by eligible
participants for the benefit of more than four million
registered investors. The face value of securities under custody
was Argentine pesos (ArP) 119.39 billion at September 2004.
Almost all securities held in custody are either immobilized or
dematerialized as of September 2004, with only 0.3% of the total
comprised of physical certificates. After growing rapidly during
the mid-1990s, the amount of securities under custody stagnated
toward the end of the decade due to the slump in the Argentine
securities market, as foreign companies purchased some of the
largest companies listed on the Argentine stock exchange, and
international investors later pulled back from emerging markets
around the world. As a result of the various effects of the 2001
Argentine economic crisis on the local capital and financial
markets, the face value of securities under custody more than
doubled; however, as a result of the sovereign default and the
devaluation of the local currency, the market value in dollars
of securities under custody decreased to $40 billion in
September 2004 from $45 billion in December 2000.

In addition to its primary responsibility of securities custody,
Caja performs several trust bank functions. It is paying agent
for stock and bond issuers and stock registrar for listed
companies. Caja also provides data-processing services for its
principal shareholders: Mercado de Valores de Buenos Aires S.A.
(Merval) and Bolsa de Comercio de Buenos Aires (Bolsa), both
unrated entities. Caja's securities-safekeeping functions are
statutorily separated from Merval's obligation to guarantee the
settlement of securities trades on the Bolsa. Other of Caja's
various roles include mortgage bills registrar and numbering

Profitability, historically, was strong, a function of Caja's
effective monopoly in Argentina, stabilizing at healthy levels
toward the end of the 1990s, as a consequence of Argentina's
capital markets becoming more internationalized, which made
Caja's lower fees for securities custody and transfer services
more in line with global standards. Fees from ancillary services
and income from financial investments help to support the bottom

The Argentine financial and economic crisis that began in
December 2001 affected Caja both financially and operationally.
In the second half of 2001, the Argentine government launched a
distressed debt exchange by which public bonds were replaced by
loans, which, at a first stage, reduced significantly the amount
of government bonds in custody in Caja, as well as the related
fees. Additionally, the various defaults of Argentine issuers-
including that of the sovereign-reduced the fees collected for
acting as paying agents during 2002. Despite this negative
environment, Caja strived to take advantage of the new
environment and engaged in the rapid development of new systems
to allow for the custody and registrar of the various new
financial instruments and businesses that emerged as a result of
the debt exchanges and government measures that took place
during the year. In this context, net income before income tax
was almost nonexistent in 2002, while the high income taxes paid
as a consequence of the government's extraordinary fiscal
pressure resulted in Caja's reporting losses of ArP19.6 million
($6.0 million) in fiscal 2002, in what constituted the entity's
first negative result in years. In 2003 and 2004, along with the
improvement of the country's operating environment, Caja rapidly
resumed the path of healthy profitability, due to the strong
growth in assets under custody and the entity's solid
fundamentals. In 2005, Caja's key role in the Argentine
sovereign debt exchange-scheduled to take place in the first
quarter of the year-points to the institution's high earnings
potential for the period.

Caja has three lines of defense to protect itself from
operational losses, as follows:

    * A strong balance sheet characterized by a liquid
      portfolio and a solid capital foundation;
    * Insurance coverage for up to $50 million; and
    * Caja's shareholders, Bolsa and Merval, provide guarantees
      of up to 150% of subscribed capital.


The stable outlook incorporates Caja's conservative operating
philosophy, diversity of revenues, and strong financial profile,
which have proved to be important buffers against the systemic
risks inherent to operating in Argentina.


Caja is Argentina's central securities depository. Its primary
function is the safekeeping of government bonds and corporate
securities listed on the Bolsa, as well as those government
bonds listed on the Mercado Abierto Electr¢nico, the over-the-
counter market. Eligible participants deposit the securities for
the benefit of more than four million registered investors. The
face value of securities under custody was ArP119.39 billion at
September 2004.

After growing rapidly during the mid-1990s, the amount of
securities under custody stagnated toward the end of the decade
due to the slump in the Argentine securities market, as foreign
companies purchased some of the largest companies listed on the
Argentine stock exchange, and as a result of international
investors later pulling back from emerging markets around the
world amid the crises in Southeast Asia, Russia, and Brazil
between 1997 and 1999. More recently, as a result of the various
effects of the Argentine economic crisis on the local capital
and financial markets, the face value of securities under
custody more than doubled between 2000 and 2002; however, the
market value in dollars of securities under custody decreased to
$40 billion in September 2004 from $44 billion in December 2000,
mostly as a consequence of the sovereign default and the
devaluation of the local currency.

In terms of par value, 6.81% of securities under custody are
government bonds, 16.67% time deposits, 0.37% corporate
equities, 3.14% financial trusts, and 10.68% corporate bonds.
Less than 0.3% of securities on deposit at Caja are in physical
form. A small 5.38% is represented by global certificates (i.e.,
immobilized), and 94.36% are in book-entry form (i.e.,

Caja has accounts at Clearstream (Cedel) and Euroclear to allow
securities held abroad to be traded on the Bolsa. As of Sept.
30, 2004, ArP6.46 billion and ArP17.64 million of securities
were held in custody on behalf of third parties at Cedel and
Euroclear, respectively. Caja also has an account at The
Depository Trust Co. In addition, Caja has an account at
Servicio de Compensaci¢n y Liquidaci¢n S.A. in Spain, which in
turn has recently opened an account with Caja to enable Spanish
investors to hold Argentine securities in custody.

In addition to its principal duty as a central securities
depository, Caja acts as paying agent, collecting interest and
dividends from issuers and distributing these payments to the
beneficial owners of securities.

Caja performs other services for various constituencies, and
these ancillary services help diversify its revenue. For
example, it is the registration agent for the common stock of 99
listed companies and for 359 other financial instruments. In
this capacity, Caja competes against local commercial banks, but
its scale and proven systems capability give it a competitive

It has also become the registrar for book-entry MBS and
custodian for the mortgage loan documents that support these
bonds. Caja also provides data-processing services to the Bolsa
and Merval. Caja's computing capabilities support the
dissemination of price and volume data of securities trades on
the Bolsa, as well as the clearing and settlement functions of

On occasion, Caja is called upon to act as a third-party
trustee. Caja is also trustee for the commercial banks that own
Seguros de Depositos S.A., the deposit insurance program
established in 1995 by the BCRA. By statute, Caja is not legally
responsible for the safekeeping of these funds. More recently,
Caja has been appointed as Trust Agent for bonds exchanged by
guaranteed loans by the end of 2001.

Primary Credit Analyst: Carina Lopez, Buenos Aires (54) 11-4891-

The reorganization of Industria Constructora Metalurgica S.A.
has been concluded. Data revealed by Infobae on its Web site
indicated that the process ended after Court No. 16 of Buenos
Aires' Civil and Commercial tribunal made official the debt
agreement signed between the Company and its creditors.

CONTACT: Industria Constructora Metalurgica S.A.
         Dr Ignacio Arieta 3844
         (1754) San Justo
         Buenos Aires
         Phone: (011) 4651-1491
         Fax:(011) 4441-3973

NORTE ASISTENCIA: Court Appoints Trustee for Reorganization
Norte Asistencia Empresaria S.A., a company operating in Buenos
Aires, is ready to start its reorganization after Court No. 13
of the city's civil and commercial tribunal appointed Mr. Miguel
Kupchik to supervise the proceedings as trustee.

Infobae states that Mr. Kupchik will verify creditors claims
until February 28. Afterwards, he will present these claims as
individual reports for final review by the court on April 13.

The trustee will also provide the court with a general report
pertaining to the reorganization on May 26. The court has
scheduled the informative assembly on November 11.

Clerk No. 26 assists the court on this case.

CONTACT: Mr. Miguel Kupchik, Trustee
         Alsina 1360
         Buenos Aires

* ARGENTINA: Bond Plummets on Investors' Reaction to Debt Swap
Concern that more investors than expected will reject
Argentina's US$103 billion debt restructuring offer sent the
government's most-traded bond to its biggest drop in six months,
reports Bloomberg. According to JPMorgan Chase & Co, Argentina's
defaulted bond due in 2008 fell 1.3 cent on the dollar to 31
cents at 3:30 p.m. Tuesday in New York. At that price the bond
would yield 69.6 percent. The decline was the biggest since the
bond fell 2 cents on the dollar on June 2 of 2004.

"Early last week there was a wave of optimism that acceptance
could be as 80 percent or 85 percent and investors would
capitulate," said Christian Stracke, an analyst with
CreditSights Inc. in New York

However, bondholders' reaction to the government's restructuring
proposal this week has changed the outlook for how many
investors may participate in the proposed bond swap. Elio
Lannutti, who heads the Italian consumer association Adusbef,
said Argentine Finance Secretary Guillermo Nielsen's meeting
with investors in Rome on Monday was a "waste of time."

"It has become apparent that a lot of investors won't
participate and that's scaring others that the rejection rate
will be very high," Stracke said.

The completion of the swap is a condition of a US$13.3 billion
International Monetary Fund loan accord put on hold in July.
Argentina in June offered to pay creditors 25 cents per dollar
of defaulted debt, as measured by the discounted present value
of the bonds' payments, about half what Russia and Ecuador paid
in debt restructurings in the past five years.

Meanwhile, a senior Argentine Economy Ministry official said
Tuesday Japanese securities regulators are expected to soon
approve Argentina's debt exchange offering documents, allowing
bondholders in the Asian country to participate in the debt

Representatives from both governments met Friday, and the
Japanese side presented a proposal to participate in the
exchange, the official said, adding that it is possible
authorization from securities regulators could come as early as
this week.


FOSTER WHEELER: Takes $76M Earnings Charge Over Court Ruling
Foster Wheeler Ltd. (OTCBB: FWHLF) announced Tuesday that it
will take a charge to earnings in the fourth quarter as a result
of an adverse court decision in asbestos coverage allocation
litigation involving certain of its subsidiaries. On January 10,
2005, a New York state trial court entered an order finding that
New York, rather than New Jersey, law applies in a lawsuit
regarding the allocation of liability for asbestos-related
personal injury claims among the Foster Wheeler entities and
their various insurers.

As a result of this decision, Foster Wheeler will record a
charge to earnings in the fourth quarter of 2004 of
approximately $76 million. After recording this charge, the
Company continues to believe that it will not be required to
fund any asbestos liabilities from its cash flow before 2010.
However, unless this decision is reversed on appeal, Foster
Wheeler expects that it will be required to fund a portion of
its asbestos liabilities from its own cash beginning in 2010.
The amount and timing of these funding requirements will be
dependent upon, among other things, litigated or negotiated
resolution of the various disputes between Foster Wheeler and
the insurers with whom it has not yet settled. In addition,
Foster Wheeler continues to evaluate whether the court's
decision will have any additional impact on the calculation of
its insurance asset, its cash flow requirements, or both. Foster
Wheeler intends to continue actively to pursue settlements with
its insurers and to manage its insurance portfolio in order to
minimize its cash obligations going forward.

The Company intends promptly to file an appeal of the New York
court's decision, and believes that it has solid grounds
supporting reversal.

The litigation seeks to determine the respective obligations of
Foster Wheeler's various insurers to indemnify Foster Wheeler
for asbestos-related bodily injury losses. The substantive laws
of New Jersey and New York apply different methods of allocating
insurance proceeds available to satisfy claims triggered over
multiple years. The application of New York, rather than New
Jersey, law would result in Foster Wheeler realizing lower
insurance recoveries.

Since the inception of this litigation, Foster Wheeler has
calculated its estimated insurance recoveries applying New
Jersey law. The Company based its approach on, among other
considerations, the advice of its outside asbestos litigation
counsel and its team of internal and external asbestos advisors.
In light of the court's decision, Foster Wheeler in the fourth
quarter will calculate its estimated insurance recoveries
applying New York law, which will result in the charge to
earnings described above.

About Foster Wheeler:

Foster Wheeler Ltd. is a global company offering, through its
subsidiaries, a broad range of design, engineering,
construction, manufacturing, project development and management,
research and plant operation services. Foster Wheeler serves the
refining, upstream oil and gas, LNG and gas-to-liquids,
petrochemicals, chemicals, power, pharmaceuticals, biotechnology
and healthcare industries. The corporation is based in Hamilton,
Bermuda, and its operational headquarters are in Clinton, New
Jersey, USA.

CONTACT: Foster Wheeler Ltd.
         Media Contact:
         Ms. Maureen Bingert
         Phone: 908-730-4444
         Investor Contact:
         Mr. John Doyle
         Phone: 908-730-4270

         Web site:


CSN: Moody's Affirms CSN Islands' B1 Foreign Currency Rating
Moody's Investors Service affirmed the B1 foreign currency
rating on CSN Islands IX Corp. guaranteed notes due 2015.
Concurrently, the ratings agency assigned a B1 foreign currency
rating to US$200 million of 10% add-on guaranteed notes due
2015. The notes are guaranteed by Companhia Siderurgica Nacional
(CSN). The rating outlook is positive.

Moody's rating action reflects the continued high level of gross
debt employed in the company's capital structure, increasing raw
material costs, particularly for coke and coal and the increased
capital spending program for new investments approximating
US$780 million over the next several years.

Also, the high level of payout to shareholders continues to be a
consideration in the rating.

CSN Islands IX Corp. foreign currency rating outlook is positive
reflecting the positive outlook that Moody's has on Brazil's B1
long-term foreign currency ceiling for bonds and notes.


ENAMI: Sells Quebrada Blanca Stake To Help Cover Debt Payment
Enami is selling its 10% stake in the Quebrada Blanca copper
mine to raise money to complete the payment of some US$450
million in debts, reports Business News Americas. The company
has hired investment bank Bice Chile Consult to handle the
operation. According to Bice investment manager Alberto
Schilling, the bank is putting the finishing touches to the
sale. Enami plans to launch the sale in 2-4 weeks' time and
expects to complete the operation within two or three months of
its launch.

Chile's mining minister and Enami president Alfonso Dulanto said
earlier that the Enami board has placed a price of almost US$30
million on its share.

The proposed sale has lured the interest of several companies,
including Quebrada Blanca's controlling shareholder Canadian
miner Aur Resources (TSX: AUR) with 76.5% and minority
stakeholder Inversiones Mineras with 13.5%.

Enami will use the US$393 million proceeds from the sale of
Ventanas smelter-refinery to state copper company Codelco to
cover a large chunk of the upcoming US$450-million debt payment,
while returned mineral left in Ventanas is expected to settle
any remaining debts.


ECOPETROL: S&P Withdraws Ratings at Company's Request
Standard & Poor's Ratings Services withdrew its 'BBB' local
currency and 'BB' foreign currency corporate credit ratings on
Ecopetrol S.A. at the company's request. Ecopetrol had no
publicly rated debt.

Ecopetrol is an integrated oil Company majority-owned by the
Colombian government. The Company's activities include
exploration for and production of crude oil and natural gas and
refining, transportation, distribution, and marketing of refined
products. Ecopetrol is Latin America's fourth-largest integrated
oil concern. Operations are organized into exploration and
production, refining and marketing, transportation, and
international commerce and gas.

Primary Credit Analyst: Santiago Carniado, Mexico City (52) 55-

Secondary Credit Analyst: Laura Martinez, Mexico City (52) 55-

E L   S A L V A D O R

SEGUROS DE OCCIDENTE: Fitch Withdraws Rating Following Exit
Granting a request from Seguros de Occidente Guatemala, Fitch
Centro America has withdrawn its EE national scale rating for
the insurance company's El Salvadorian unit, Seguros de

The request follows Seguros de Occidente Guatemala's decision to
cease operations in El Salvador in October of last year because
of start-up delays and operating losses.

Despite the company's low sales volume, Seguros de Occidente El
Salvador managed to achieve favorable leverage and liquidity
indicators compared to the local market.


NCB JAMAICA: S&P Affirms Ratings; Outlook Stable
Standard & Poor's Rating Services affirmed its 'B/B'
counterparty credit and CD ratings on National Commercial Bank
Jamaica Ltd. (NCB). The outlook is stable.

The ratings on NCB are constrained by the sovereign ratings on
Jamaica, as sovereign bonds and loans to public entities
represent most of NCB's assets. The ratings are also constrained
by NCB's larger-than-peer loan concentration in its main clients
and its operating in a relatively small, highly indebted, and
nondiversified economy. "The ratings are supported by the bank's
relevant market presence in the Jamaican banking system and
improving operating performance since the bank's privatization
in 2002," said Standard & Poor's credit analyst Leonardo Bravo.

NCB maintains a large exposure to Jamaica's government,
represented by investments in government bonds. In addition, an
important portion of the loan portfolio is concentrated in
Jamaican public-sector companies in which the government is the
ultimate payer. Concentration in NCB's loan portfolio is higher
than that observed in other Central American and Caribbean banks
because the loan portfolio is relatively small, there is a
reduced number of clients, and loans are larger than those of
other institutions. Although NCB is increasing its consumer
loans to improve margins and to diversify its loan portfolio,
its main business is commercial lending and it would take time
to decrease concentrations and change the business mix.

The stable outlook mirrors the outlook on Jamaica's sovereign
credit ratings, and reflects NCB's significant exposure to that
country, with most of the bank's assets represented by
government securities. NCB has improved its financial profile,
but it is challenged to further increase its loan portfolio,
maintaining adequate asset quality and reducing loan

The positive developments concerning profitability are expected
to continue; however, an improvement in efficiency has to be
implemented to maintain the trend.

Primary Credit Analyst: Leonardo Bravo, Mexico City (52)55-5081-

Secondary Credit Analyst: Jaime Carreno, Mexico City (52) 55-


ACCURIDE CORPORATION: Moody's Assigns, Confirms Ratings
Moody's Investors Service assigned a B2 rating to the following
new debt securities issued by Accuride Corporation and Accuride
Canada Inc.:

- Accuride Corporation's US$615 million first lien term loan;
- Accuride Corporation's US$95 million first lien revolving
credit; and
- Accuride Canada Inc.'s US$30 million first lien revolving

A Caa1 rating has been assigned to Accuride Corporation's
proposed offering of senior subordinated notes to be issued
under Rule 144a.

Further, Moody's confirmed the following ratings:

- Caa1 for Accuride Corporation's existing US$189.9 million of
remaining senior subordinated note;
- B2 for Accuride Corporation's senior implied rating; and
- B3 for Accuride Corporation's senior unsecured issuer rating.

The outlook has been revised to positive from stable.

Moody's said the rating actions follow from the refinancing plan
that Accuride has announced as part of its acquisition of
Transportation Technologies Industries, Inc. ("TTI"), which
could incorporate new equity issuance as indicated in the filing
of an S-1 with the SEC.

The positive outlook considers the potential for the continued
favorable performance of the combined group and the issuance of
primary equity to result in debt reduction.

Accuride is North America's largest manufacturer and supplier of
wheels for heavy/medium duty trucks and trailers and offers both
steel and forged aluminum products. It also produces wheels for
buses, commercial light trucks, pick-up trucks, SUVs, and vans.
Its operations are in Kentucky; Ohio; Pennsylvania; Ontario,
Canada; and Monterey, Mexico.

GRUPO IUSACELL: Offers Push-to-Talk to Subscribers
Mexican phone company Iusacell enters the push-to-talk market
with Radio Plus, a new service that will offer instant, two-way
walkie-talkie communications to subscribers using their mobile
phones. According to Comtex Business, Radio Plus will ride on
the Company's third-generation Code Division Multiple Access
(CDMA) technology that uses the IP voice system.

The payments plans available in Radio Plus includes roaming or
long distance service as well as private or group radio
services. Radio Plus will be available in 66 Mexican cities.

CONTACT: Grupo Iusacell S.A de C.V.
         Prolongacion Paseo de la Reforma 1236
         Colonia Santa Fe
         Delegacion Cuajimalpa
         Mexico, D.F. 05348
         Phone: 011-525-109-5754
         Web site:

ISSSTE: Reform Postponement Spells More Costs for Government
Mexico's Treasury Secretariat (SHCP) estimates that the delay in
enacting reforms called for by the Social Security and Services
Institute for State Workers (ISSSTE) Law will cost the
government MXP4.5 billion this year.

Comtex Business reports that the additional cost will come from
deficits in the pension system that are expected to rise from
MXP25.1 billion in 2004 to MXP29.6 billion at the end of this
year. These estimates were released through a paper drafted by
the General Administration of Insurance and Securities of the

The document further computes costs connected to reforms in the
ISSSTE to be MXP13 billion in the first year, MXP9.4 billion on
the second year and MXP4.7 billion in the third year.

Once the proposed changes are adopted, ISSTE will convert its
scheme to a system of individual accounts through the private
pension funds (Afores).


PDVSA: Faces Mounting Pressure to Boost Production
Oil industry experts say that Venezuela's recent contract
disputes with private oil firms are putting the country's plans
to increase oil output capacity at risk, reports Dow Jones

Just a week ago, a large-scale oil and natural gas project
involving oil major ConocoPhillips (COP) and Italy's Eni Spa (E)
was frozen temporarily over a contract dispute, while other
foreign companies have received requests from the government to
cut their budgets. Furthermore, Harvest Natural Resources Inc.
(HNR) revealed plans this week to suspend drilling activities in
Venezuela due to permit delays.

"The pressure is on for Venezuela to increase production, and
without foreigners, that will fall on PdVSA [Petroleos de
Venezuela]," said Roger Tissot, the head of Latin America for
Washington-based PFC Energy, an energy consulting firm.

"If they don't have foreign companies, they will have more
difficulties increasing capacity," added Mr. Tissot.

Venezuela is seeking to boost output to 5 million barrels a day
by 2009, nearly twice as much as industry analysts say the
country is producing currently. PdVSA claims it is producing
over 3 million b/d, in line with the country's OPEC oil
production quota.

Venezuela is the world's fifth-largest oil exporter and a major
supplier of crude oil and products to the U.S.

* VENEZUELA: S&P Cuts Currency Ratings over Selective Default
Standard & Poor's Ratings Services lowered its long- and short-
term foreign currency sovereign credit ratings on the Bolivarian
Republic of Venezuela to 'SD' from 'B' following the nonpayment
of oil-indexed payment obligations. At the same time, Standard &
Poor's affirmed its 'B' rating on the republic's senior
unsecured foreign currency debt and its 'B' long- and short-term
local currency sovereign credit ratings. The outlook on the
local currency ratings is stable.

"Venezuela's oil-indexed payment obligations are financial
obligations ranking pari passu in priority of payment with all
of the republic's debt," said Standard & Poor's Ratings Services
credit analyst Richard Francis. "An 'SD' rating is assigned when
Standard & Poor's believes that the obligor has selectively
defaulted on a specific issue or class of obligations but it
will continue to meet its payment obligations on other issues or
classes of obligations in a timely manner. In this case,
Standard & Poor's believes that the republic's capacity and
willingness to service its debt other than the oil indexed
payment obligations is comparable to other issuers rated 'B',"
he added.

On Oct. 15, 2004, Venezuela owed an estimated US$35 million on
oil-indexed payment obligations that were originally issued in
conjunction with the government's bank-debt restructuring in
1990. According to the government, the obligations have been out
of the money until the last reference period; problems with
verifying the exact amounts owed and with the creditor register
have resulted in the delay in making the payment.

"Standard & Poor's expects the government to make the payment on
the obligations by next month, at which time Venezuela's long-
and short-term foreign currency sovereign credit ratings will
likely be reset to 'B'," Mr. Francis concluded.

Primary Credit Analyst: Richard Francis, New York (1)-212-438-

Secondary Credit Analyst: John Chambers, CFA, New York (1) 212-


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 America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
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Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and
Lucilo Junior M. Pinili, Editors.

Copyright 2005.  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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