TCRLA_Public/050124.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

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

            Monday, January 24, 2005, Vol. 6, Issue 16



AGUAS ARGENTINAS: Suez Departure Anticipated
BANCO BISEL: Local S&P Maintains Bonds' `raD' Ratings
BANCO SUQUIA: S&P Maintains `raD' Ratings on $36M Worth of Bonds
CAPEX: S&P Reierates Junk Ratings on Company Bonds
* ARGENTINA: Japanese Regulators Approve Debt Swap Documents


INTELSAT: Moody's Changes Rating Outlook to Negative
SEA CONTAINERS: Declares Cash Dividend


BANCO CITIBANK: S&P Releases Ratings Report
BANCO ITAU: Moody's Rates $125M, '08 Notes `Ba2'
CEMIG: Six Firms Qualify for Power Supply Tender Offer
UNIBANCO: S&P Assigns BB/B LC Counterparty Credit Ratings
* BRAZIL: Fitch Assigns 'BB-' to 10-yr Euro Bonds

D O M I N I C A N   R E P U B L I C

* DOMINICAN REPUBLIC: Expects Approval of $670M IMF Loan


GRUPO IUSACELL: Cofetel Threatens Sanction Over PTT Launch
MINERA AUTLAN: Revenue Rises 125% in 4Q04


ANCAP: Vazquez Meets Kirchner to Discuss Solution to Trade Snag
UTE: Brazil Commences Power Supplies


PDVSA: Substation Project Underway in Anzoaegui
SIVENSA: Auditor Presents Independent Report
SIVENSA: Annual Shareholders Meeting Set for January 28
* VENEZUELA: Payment Delay Underscores Debt Management Concerns

   - - - - - - - - - - -


AGUAS ARGENTINAS: Suez Departure Anticipated
Argentina's local press is speculating that French water company
Suez will soon sell its stake in Aguas Argentinas. Suez holds
39.9 percent stake in the water works utility. According to
Business News Americas, the Company is pulling out from
Argentina because water rates control and tax charges have hurt
its ability to recover losses stemming from the peso devaluation
in 2001.

The Company also suffers from government-imposed fines, most
recently a US$683,000 penalty, coming from service interruptions
as well as criticisms that it has been unable to fulfill
investment targets.

Suez however has refused to confirm these reports. Company
representatives have explained that it needs the approval of
shareholders before it can come up with a decision.

Meanwhile, French President Jacques Chirac has expressed
complaints over fees applied to Aguas Argentinas during
President Nestor Kirchner's recent visit to France.

BANCO BISEL: Local S&P Maintains Bonds' `raD' Ratings
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
maintains an `raD' rating on two Short Term Debt Securities (NSC
Reg. N 344) issued by Banco Bisel S.A. under Program, the
Comision Nacional de Valores (CNV) reports.

The debt securities are:

- US$54 million worth of "Obligaciones Negociables Subordinadas"
issued under Series and/or Class that matured on July 20, 2000;

- US$300 million worth of "Programa de Emisi›n de Titulos de
Deuda a Mediano Plazo" issued under Program that also matured on
July 20, 2000

The rating action was taken based on Banco Bisel's financial
health as of September 30, 2004.

According to S&P, an obligation is rated `raD' when it is in
payment default, or the obligor has filed for bankruptcy. The
rating is used when interest or principal payment are not made
on the date due even if the applicable grace period has not
expired, unless the ratings agency believes that such payments
will be made during such grace period.

BANCO SUQUIA: S&P Maintains `raD' Ratings on $36M Worth of Bonds
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
maintains a default rating on US$36 million worth of corporate
bonds issued by Banco Suquia S.A., says Argentine securities
regulator, the CNV.

The action, based on the bank's financial status as of September
30, 2004, affected the following bond issues:

- US$23 million worth of "Obligaciones Negociables subordinadas,
autorizadas por AGO de fecha 19.12.97" due on November 7, 2005;

- US$13 million worth of "Obligaciones Negociables subordinadas
convertibles, autorizadas por AGE de fecha 19.9.97" due on May

CAPEX: S&P Reierates Junk Ratings on Company Bonds
Standard & Poor's International Ratings, Ltd. Sucursal Argentina
reaffirmed junk ratings given to Capex S.A.'s corporate bonds.
According to Argentina's securities regulator, the Comision
Nacional de Valores, the given ratings are based on the
Company's finances as of October 31, 2004.

S&P issued a `raD' rating to US$105 million of "obligaciones
negociables simples", due on December 23 this year. An
obligation is rated `raD' when it is payment default, or the
obligor has filed for bankruptcy, said the ratings agency.

Another US$150 million of the Company's bonds due on January 1,
2005 received a `raCC'. The bonds are also called "obligaciones
negociables simples." The same rating applies to US$40 million
of the Company's bonds due on June 11. These set of bonds are
classified under "simple issue". S&P said that an obligation
with this rating is currently highly vulnerable to non-payment.

* ARGENTINA: Japanese Regulators Approve Debt Swap Documents
The Argentine Economy Ministry announced that securities
regulators in Japan have given their approval on the embattled
government's offering documents for its US$103 billion debt

According to Dow Jones Newswires, Japan was the last relevant
jurisdiction to approve the offering documents, which had gotten
the approval of U.S., Italy, Germany and Luxembourg as of Jan.

But while securities regulators abroad are giving green light to
Argentina's debt offering documents, a broad coalition of some
of the leading members of the biggest creditor group in
Argentina's restructuring threatened to sue to country.

According to bondholders familiar with the plan, New York-based
hedge fund Greylock Capital and a number of other U.S. and
European institutions influential in the US$38 billion-strong
Global Committee of Argentine Bondholders began discussions with
law firms last week over initiating a lawsuit against the

These people say they intend to preemptively block the
government from later using controversial "exit consent clauses"
that could strip bondholders who don't participate in the
restructuring of rights contained in old defaulted bond

The government has said it won't use these clauses, which seek
the approval of a binding majority of bondholders to amend the
old bond language.

However, bondholder lawyers say such promises are not legally
binding and worry that the government will later introduce them
as a condition for participating bondholders to settle the


INTELSAT: Moody's Changes Rating Outlook to Negative
Moody's Investors Service has revised its outlook on Intelsat
Ltd. to negative from stable after the company announced a
second satellite failure in two months, reports Reuters.

Intelsat, the satellite operator being taken over in a leveraged
buyout, plans to issue US$500 million of seven-year notes with
floating interest rates, US$1.3 billion of eight- year notes and
US$750 million of 10-year notes with fixed-rate coupons.
Deutsche Bank AG, Credit Suisse First Boston Inc. and Lehman
Brothers Inc. are managing the sale.

According to research firm KDP Advisors Inc., the junk bonds may
yield as much as 3.8 percentage points more than U.S. government
debt. On Jan. 14, Moody's rated the Intelsat issues B1, four
levels below investment grade.

Intelsat's offering was delayed for a month by a malfunction on
its Americas-7 satellite. The company said Jan. 16 that another
satellite broke.

CONTACT:  Intelsat (Bermuda), Ltd.
          Wellesley House North, 2nd Floor
          90 Pitts Bay Road
          Pembroke, HM 08
          Telephone: +1 441-294-1650
          Fax: +1 441-292-8300

SEA CONTAINERS: Declares Cash Dividend
The Board of Directors of Sea Containers Ltd. declared Friday
quarterly cash dividends on the Company's Class A and Class B
common shares.

The dividend will be $0.025 per share on the Class A common
shares and $0.0225 per share on the Class B common shares. Class
B common shares are convertible at any time into Class A common
shares.  The dividends will be payable February 22, 2005 to
shareholders of record February 4, 2005.

The Class A and B common shares of Sea Containers Ltd. are
listed on the New York Stock Exchange under the symbols SCRA and
SCRB, respectively.

CONTACT: Sea Containers Ltd.
         Mr. William W. Galvin
         Phone: (203) 618-9800


BANCO CITIBANK: S&P Releases Ratings Report
Foreign currency:                  BB-/Stable/--

Outstanding Rating(s)
Counterparty Credit
Foreign currency                  BB-/Stable

Major Rating Factors


    * Support from parent
    * Track record
    * Asset quality


    * Exposure to Brazilian risk
    * Strong competition


The ratings on Banco Citibank S.A. (Citi) reflect the
uncertainties of operating in Brazil and the institution's
exposure to the domestic economic risk, also marked by strong
competition in both the wholesale and the retail segments.
Offsetting these negatives, Citi's rating is sustained by having
Citigroup Inc. (AA-/Stable/A-1+) as shareholder and Standard &
Poor's Ratings Services' expectation of parent support. The
rating also mirrors Citi's positive track record in the local
market, its knowledge of the country, and the good credit
quality of its loan portfolio, as attested by strong
nonperforming loan indicators.

The rating on Citi is based on the support of its parent. In our
opinion, except for a scenario of systemic risk, support should
be forthcoming in case of need. The Brazilian operation fits
well into Citigroup's objective to have a global presence and
provide financial services to its global corporate customers. In
addition, Citi should continue to focus on its asset management
operation (the bank controls the fifth-largest asset manager in
Brazil as of December 2004) and in the credit card business. In
this line, Citi increased its participation in Credicard, (one
of the largest credit card companies in Brazil) to 50%, as Citi
and Ita£ bought out Unibanco. This acquisition is seen as
strategic to maintain the bank's competitiveness in the credit
card business and use its customer base to improve cross selling
with products like insurance, funds, and others.

The rating also considers the benefits of Citi's brand-name
recognition and its integration to the parent company in terms
of management, procedures, and philosophy. Management follows
the conservative procedures adopted by Citigroup worldwide. In
credit risk management, for example, its historically cautious
approach has led to asset quality indicators better than market
average even in difficult times.

On the other hand, the bank's profitability in Brazilian GAAP is
penalized by the conservative foreign exchange hedging policy of
its parent. Citigroup hedges specific investments outside the
U.S. by acquiring local assets denominated in dollars. This
strategy affects the balance sheet in volatile countries like
Brazil in 1999, and more recently in 2002, when the Brazilian
real (BrR) devaluated and the bank posted generous profits.
Nevertheless, in 2003 and 2004, this strategy led Citi's
Brazilian books to show losses. During 2003, Citi presented net
losses of BrR146 million and, in third-quarter 2004, Citi's
losses amounted to BrR336 million. Excluding such foreign
exchange effects, the bank would have presented a profit in 2003
and a small loss from January to September of 2004. During 2004,
its results were also negatively affected by the bank's decision
of writing off around BrR263 million of tax credit that was
generated in 2002 (when Brazilian authorities implemented rules
regarding the classification and registering of prices of

Given its historically cautious approach, Citi's asset quality
remained strong, even in times of turbulence. Its nonperforming
loans-to-total loans ratio (measured by credits classified
between the E and H categories according to local regulation)
reached 1.5% in September 2004, down from 2.2% in December 2001.
The industry average is 6%, including consumer loans (not Citi's
focus). In addition, the bank's good financial profile is also
evidenced by the strong liquidity in its balance sheet-with
liquid assets representing more than 30% of total assets.

Citi has a long track record in the country. Having started
operations in 1915, the bank acquired strong knowledge of Brazil
and its credit culture. Currently, Citi is the 12th-largest
private bank operating in Brazil, as measured by total assets.
It offers a broad range of products and services, operating
under the concept of "Global Bank" to its corporate and retail
clients. It is a strong player in commercial, investment
banking, and asset management in Brazil, with a good business
profile and competent management to face competition in the
wholesale segment.


The stable outlook reflects the outlook assigned to the
sovereign credit rating on Brazil. At the current level, the
rating on Citi is constrained by the sovereign credit rating,
meaning that any change either in the outlook or in the rating
on the Federative Republic of Brazil would lead to a similar
action for the ratings on the bank.


Citigroup's business in Brazil is conducted through two main
legal entities: the subsidiary, Citi, and the full branch,
Citibank N.A. Citigroup is the largest shareholder of both
entities, indirectly owning 99.9% of Citi. The combined
operations of Citigroup in Brazil are responsible for around 25%
of the total generated results in Latin America. In Brazil, Citi
focuses on wholesale activities, offering to approximately 3,000
clients a wide variety of financial products, including
corporate banking, treasury management, capital markets, asset
management, private banking, credit card, leasing, and
bancassurance. The bank is also an important provider of
services and products to high-income individuals.

Primary Credit Analyst: Claudio Gallina, Sao Paulo (55) 11-5501-

BANCO ITAU: Moody's Rates $125M, '08 Notes `Ba2'
Banco Itau S.A.'s (Cayman Islands) US$125 million notes,
maturing January 2008 obtained a Ba2 long-term foreign-currency
debt rating from Moody's Investors Service.

The outlook on the rating is positive.

According to the ratings agency, the Ba2 rating incorporates
Banco Itau's fundamental credit quality, which is reflected by
its A3 global local currency rating and which includes all
relevant country risks.

Also, the Ba2 rating reflects the probability of a sovereign
default implied by the Brazilian government's sub-investment-
grade B1 foreign currency bond rating, and the likelihood that
the Brazilian government could impose a debt moratorium in the
event of default on its own foreign currency obligations.

Banco Itau is based in Sao Paulo, Brazil.

CEMIG: Six Firms Qualify for Power Supply Tender Offer
Six engineering firms qualified for the first stage of Brazilian
power company Cemig's tender for BRL1.6 billion (US$589mn) light
for all power supply expansion program, reports Business News
Americas. These companies are Brazilian engineering firms CBPO
Engenharia, Camargo Correa, Andrade Gutierrez, Queiroz Galvao,
Selt Engenharia and Unicoba Importacao.

The program, which aims to provide power to 105,000 consumers in
poor rural areas in the state of Minas Gerais by end-2006, will
be tendered as four separate contracts. Cemig plans to open bids
January 26.

CONTACT: Cemig - Companhia Energetica
         AV. Barbacenda 1200
         Bello Horizonte MG, 30161-970

UNIBANCO: S&P Assigns BB/B LC Counterparty Credit Ratings
Standard & Poor's Ratings Services assigned its 'BB/B' local
currency counterparty credit ratings to Unibanco-Uniao de Bancos
Brasileiros S.A. (Unibanco). The outlook is stable. The 'BB-'
long-term foreign currency counterparty credit rating on
Unibanco was also affirmed. At the same time, Standard & Poor's
assigned its 'BB-' foreign currency long-term credit rating to
Unibanco's first long-term notes (Eurobond) denominated in
Brazilian reais in an amount equivalent to $75 million, with an
annual coupon of 17.9%, issued on Dec. 14, 2004, and maturing on
June 14, 2006.

"The local currency rating on Unibanco reflects its operational
efficiency, which is in line with that of its domestic
competitors but still inferior to that of its Latin American
peers; the relatively weak quality of its credit assets,
reflected by the significant volume of write-offs against
provisions when compared to its domestic rivals; and the
implicit risks of operating in the Brazilian market," said
Standard & Poor's credit analyst Claudio Gallina. Partially
counterbalancing these aspects, the rating also mirrors the
growth of the institution's franchise in Brazil by means of
acquisitions and associations; its business strategy, which is
aligned with the current scenario of the competitive Brazilian
market; and its strong capacity to generate business.

Although Unibanco recently announced the sale of its partnership
in Credicard (a credit card company also controlled by Banco
Itau S.A. and Citibank), the bank has expanded its share in the
Brazilian retail market, both through operational agreements
with large distribution chains (such as Sonae, Magazine Luiza,
and Ponto Frio) and its own companies (Unicard, Dibens,
Fininvest, and Hipercard), maintaining the participation of the
individual items in its credit portfolio (33% at September

In June 2004, Unibanco was the third-largest Brazilian private
bank in terms of total assets. Its growth strategy through
acquisitions, strategic alliances with large retail chains, and
organic growth has helped the institution to remain as one of
the main players in the Brazilian financial system. In our
opinion, the bank should continue to benefit from the generation
of business derived from its attractive franchise in insurance,
credit cards, third-party asset management, pension funds, and

The stable outlook on Unibanco's local currency rating reflects
our expectation that, while operating more actively in the
retail market, the bank should conserve its profitability at
levels close to those presented in September 2004. The stable
outlook also factors in our expectation that, although the bank
may experience some increase in problematic loans due to the
characteristics intrinsic to the Brazilian retail market (which
could put some pressure on its NPL ratio), the stringent
monitoring of its credit portfolio quality may not allow strong
deteriorations of its write-off ratios to levels higher than the
current ones.

The stable outlook on the foreign currency rating reflects that
of the sovereign foreign currency rating of Brazil.

Primary Credit Analyst: Claudio Gallina, Sao Paulo (55) 11-5501-

* BRAZIL: Fitch Assigns 'BB-' to 10-yr Euro Bonds
Fitch, the international rating agency, assigned a 'BB-' rating
to the 500 million euros of 10-year global bonds, issued by the
government of Brazil on Thursday. Brazil's sovereign ratings
reflect the ongoing strong international trade performance of
South America's largest economy, its declining public and
external debt burdens, and a demonstrated commitment to sound
macroeconomic policies.

Exports have expanded 32% in 2004 over 2003, reflecting both
price and volume increases and growth in a broad array of
manufactured and primary exports to diverse destinations.
Brazil's trade surplus has exceeded most expectations this year,
at US$33.7 billion, yielding a current account surplus of
approximately 1.9% of GDP. Economic growth has proceeded apace,
with Fitch estimating a 5% expansion 2004, moving imports up
markedly, but not creating substantive balance of payments
pressures. As domestic demand and imports grow more briskly in
2005, the trade and current account surpluses can be expected to

External financing needs, which Fitch forecasts at US$32 billion
this year, up about US$5 billion from 2004 due to an expected
narrowing current account surplus, remain heavy due to the
legacy of past borrowing. Nevertheless, the net external debt
burden is forecast at under 130% of broad exports this year,
down from a high of 308% in 1999, but likely to fall below 100%
over the next two years.

The fiscal authorities continue to outperform their fiscal
targets, with the public sector primary surplus totaling 4.64%
of GDP in the 12 months to November. The authorities raised the
full-year 2004 target to 4.5% of GDP in September, though the
2005 target remains at 4.25%, which is nonetheless 0.5% of GDP
higher than the previous government's target. Exceptional tax
performance has been underpinned by the economic upturn as well
as by the reform of the Cofins (social security) tax in 2003.

With this as a backdrop, Brazil's public and external debt
burdens have moved down, with gross general government debt
expected to be down 5% of GDP from 2003 to under 74% of GDP by
year-end 2004, though Brazil's public and external debt ratios
still exceed the 'B' and 'BB' medians for these measures.

D O M I N I C A N   R E P U B L I C

* DOMINICAN REPUBLIC: Expects Approval of $670M IMF Loan
More loans could come in for cash-strapped Dominican Republic if
the country manages to secure approval for an important loan
program from the International Monetary Fund (IMF).

Mr. Julio Ortega Tous, economic advisor to President Leonel
Fernandez, told Dow Jones Newswires that the country expects no
hitches in the approval of its loan request from the IMF. The
IMF board is scheduled to vote on the US$670 million, 28-month
credit line on January 31. Half of the US$670 million loan will
be disbursed this year, adds Mr. Tous while another US$360
million will also come from combined disbursements from the
World Bank and IDB.

The Country is also scrambling to secure a favorable
restructuring deal for its US$1.1 billion in outstanding global
bonds. However, around US$500 million in outstanding Brady bonds
will be excluded from any restructuring.

Mr. Tous explained that the government will ask for an extension
of the bonds' maturities. He adds that the government has no
plans to reduce the principal or lower interest rates on these
bonds. Investors holding global bonds that mature in 2006 and
2013 are the likely groups affected by this scheme.

Meanwhile, the Dominican Republic is working to reschedule
bilateral obligations with the Paris Club of sovereign
creditors. The country has also successfully secured a EUR210
million loan from Spain and a financing deal with Venezuela to
cover oil importation costs.


GRUPO IUSACELL: Cofetel Threatens Sanction Over PTT Launch
Mexican telecoms regulator Cofetel warned it will impose a
sanction on mobile operator Iusacell (NYSE: CEL) if the latter
goes ahead with the launch of its new its push to talk (PTT)
service called Radio Plus, reports Business News Americas.
Cofetel said Iusacell is not currently authorized to offer this
type of service.

"If Iusacell decides to launch and sell the product, Cofetel
will impose a sanction that could be economic in nature and
whose amount would be defined by the board," a Cofetel source

Iusacell can get around the issue by applying for a specific
permit to launch the services but the company has not done so,
according to Cofetel.

The new service will offer instant, two-way walkie-talkie
communications to subscribers using their mobile phones. The
Radio Plus will ride on Iusacell's third-generation Code
Division Multiple Access (CDMA) technology that uses the IP
voice system.

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:

MINERA AUTLAN: Revenue Rises 125% in 4Q04
Strong demand for manganese-ferroalloy coupled with higher
prices for its products pushed Minera Autlan's revenue 125
percent in 4Q04 compared with results a year earlier.

Business News Americas reveals that the manganese producer ended
the fourth quarter with MXP585 million in revenues and Net Sales
of MXP1.75 billion, 79 percent higher in the same period last
year. The company also recorded a 10 percent drop in Cost of
sales from last year's figures.

Meanwhile, Ebitda during the period came at MXP188 million, a
698 percent increase on 4Q03.


ANCAP: Vazquez Meets Kirchner to Discuss Solution to Trade Snag
The presidents of Uruguay and Argentina met last week to
discuss, among other things, a solution to a glitch in the trade
relationship between Uruguay's state-owned petroleum refining
company ANCAP and Argentina's privatized Repsol-YPF, the
PetrolWorld reports.

Uruguay's President-elect Tabare Vazquez told his Argentine
counterpart President Nestor Kirchner that ANCAP is losing US$2
million a month because it buys oil at international prices but
is forced to sell to Repsol-YPF at the 30-dollar cap ordered by
the national government to control local prices.

"If we can't find a solution for that soon, our government will
have to pay too much to cover the gap," Vazquez told a press
conference he gave along with Kirchner's Cabinet Chief Alberto

UTE: Brazil Commences Power Supplies
Brazil began delivering power to Uruguay's state power company
UTE early Wednesday morning, allowing the latter to stop using
its expensive diesel-fired La Tablada plant, reports Business
News Americas. But, due to "technical difficulties," Brazilian
power trader Tractebel Comercializadora delivered only 350MW
power supplies, less than the 500MW UTE had planned to buy
through end-February.

At an average price of US$30/MWh, UTE will buy US$25 million of
power from Brazil through end-February. The power supply can be
renewed for two months if the parties agree.

Uruguay has turned to Brazil to cover domestic shortages in
recent months, as water levels at Uruguay's Salto Grande hydro
plant are much lower than normal due to lack of rain.


PDVSA: Substation Project Underway in Anzoaegui
State-owned oil company PDVSA and power outfit Cadafe will step-
in to build two power stations in the state of Anzoaegui, in an
effort to address growing power demands in the area.

Business News Americas reports that the joint venture, to be
constructed in the municipality of San Jose de Guanipa, will
cost an estimated US$2 million and is expected to operate by

Oil and gas exploration and production projects initiated by
PDVSA and its partners have increased energy needs in Anzoaegui.
The added burden on the state's grid has exposed the company to
power shortages such as the transformer failure two weeks ago
that cut electric supply for close to 72 hours.

The two substations will supply much needed power to the area
while a larger US$6mn substation is in the works.

SIVENSA: Auditor Presents Independent Report


To the Shareholders and Board of Directors of Siderurgica
Venezolana "Sivensa", S.A.

1) We have audited the accompanying supplementary consolidated
balance sheets of Siderurgica Venezolana "Sivensa", S.A.
(Sivensa) and its subsidiaries (Sivensa Group or the Group) at
September 30, 2004 and 2003, and the related supplementary
consolidated statements of income, changes in shareholders'
equity and cash flows for the years then ended, presented in
U.S. dollars and prepared in conformity with International
Financial Reporting Standards (IFRS). The preparation of these
financial statements and their notes is the responsibility of
Sivensa Group management. Our responsibility is to express an
opinion on these financial statements based on our audits. The
consolidated financial statements include the accounts of the
50.002%-owned subsidiary Vicson, S.A. (Vicson), which show total
consolidated assets of approximately US$112.1 million at
September 30, 2004 (US$92.8 million in 2003) and consolidated
net income of approximately US$7.1 million for the year ended
September 30, 2004 (US$1.2 million in 2003). The consolidated
financial statements of this subsidiary were audited by other
independent accountants whose report thereon has been furnished
to us, and our opinion expressed herein, insofar as it relates
to the amounts and disclosures included for such subsidiary, is
based solely on the report of the other independent accountants.

2) We conducted our audits in accordance with International
Standards on Auditing. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits and the report of the other independent accountants
provide a reasonable basis for our opinion.

3) In our opinion, based on our audits and the report of the
other independent accountants, the accompanying supplementary
consolidated financial statements audited by us present fairly,
in all material respects, the financial position of Siderurgica
Venezolana "Sivensa", S.A. and its subsidiaries at September 30,
2004 and 2003, and the results of its operations and its cash
flows for the years then ended, in accordance with International
Financial Reporting Standards.

4) Without qualifying our opinion, we draw attention to Note 9
to the financial statements. The loan agreement entered into by
Sivensa and Siderurgica del Turbio, S.A. "Sidetur" (Sidetur)
with creditor banks requires payment of US$17 million at March
31, 2005. Under the terms of this agreement, payment must be
made with funds obtained from the sale of certain assets,
including the shares of certain subsidiaries and real property.
The final outcome of this matter cannot be foreseen and no
provision for any liability that may result has been recorded in
the accompanying supplementary consolidated financial

5) Without qualifying our opinion, we draw attention to Notes 1
and 7 to the financial statements. The associate Orinoco Iron,
C.A. (Orinoco Iron) has been unable to meet repayment terms and
other covenants set out in the foreign currency loan agreement
with creditor banks. Consequently, this loan is considered by
creditor banks as due and payable. During 2004 Sivensa
recognized in the accompanying consolidated financial statements
a provision for contingencies in respect of the guarantee of
approximately US$190 million (US$85 million in the short term),
equivalent to the present value of estimated future payments
required to be made by Venezolana de Prerreducidos Caroni
"Venprecar", C.A. (Venprecar) to honor the guarantee granted to
Orinoco Iron's creditor banks, whose offsetting entry is an
account receivable from Orinoco Iron. These matters raise
substantial doubts as to the capacity of the subsidiary
International Briquettes Holding (IBH) and its subsidiaries and
associates to continue as going concerns.

At September 30, 2004, Orinoco Iron's financial debt amounts to
US$672 million, of which US$290 million is guaranteed with
shares and assets of IBH and its subsidiary Venprecar. Net
assets of IBH and Venprecar, included in the consolidated
financial statements of Sivensa and pledged as collateral of the
aforementioned loan, amount to approximately US$83.7 million at
September 30, 2004.

In addition, the accompanying consolidated financial statements
include other accounts receivable from Orinoco Iron of
approximately US$55 million, mainly in respect of funds
transferred by Venprecar during 2004 to assist Orinoco Iron in
financing its operations. As described in Note 20, as from
November 2004, IBH became majority shareholder and has
management control of Orinoco Iron.

IBH management continues negotiations with creditor banks to
restructure Orinoco Iron's financial debt and is of the opinion
that accounts receivable from this company will be recovered in
the long term. The strategic plans of IBH, Venprecar and Orinoco
Iron, as well as other operating and going concern issues of
these companies, are explained in further detail in Notes 7 and
20. The final outcome of these matters cannot be foreseen and no
provision for any liability that may result has been recorded in
the accompanying supplementary consolidated financial

Espineira, Sheldon y Asociados
Luis Rincon R.
CPC 4768
Caracas, Venezuela
December 9, 2004

To view financial statements:

CONTACT: Independent Auditor
         Espineira, Sheldon y Asociados
         Avenida Principal de Chuao
         Edificio Del Rio
         P.O. Box 1789
         Caracas 1010-A Venezuela
         Phone: 700-66-66
         Telecopier: 991.52.10

         Mr. Antonio Osorio
         Corporate Planning Manager
         Av. Venezuela, Edif. Torre America, Piso 12
         Sivensa Urb. Bello Monte
         Caracas, Venezuela
         Phone: (58) (212) 707.62.80
         Fax: (58) (212) 707.63.52

         Web site:

SIVENSA: Annual Shareholders Meeting Set for January 28
The Shareholders of the Company are hereby called to the Annual
Shareholders' Meeting to be held on January 28, 2005, at 11:00
a.m., at the JW MARRIOTT of the city of Caracas, Room Armando
Reveron, where the following matters will be discussed:

1. To consider the Report submitted by the Board of Directors.

2. To consider the Financial Statements and the Internal
Comptrollers' Report corresponding to the fiscal year ended

3. To appoint the Principal and Alternate members of the Board
of Directors.

4. To appoint the Principal Internal Comptrollers and their
respective Alternates. Likewise, to decide about their annual

5. To appoint the Principal and Alternate Judicial

Note: Shareholders are advised that the Report of the Board of
Directors is available at the offices located at Avenida
Venezuela, 12th Floor, Torre America, Bello Monte, Caracas.
Shareholders are reminded that the Audited Financial Statements
with the Report of the External Auditors, the Internal
Comptrollers' Report, and the lists of candidates for the
appointment of each of the Internal Comptrollers and their
Alternates have been, and continue to be, available to the
shareholders, at the same offices, since December 29, 2004, as
it was informed in the notice published in the newspapers El
Nacional and El Universal, in their respective editions of that
same date.

CONTACT: Mr. Antonio Osorio
         Corporate Planning Manager
         Av. Venezuela, Edif. Torre America, Piso 12
         Sivensa Urb. Bello Monte
         Caracas, Venezuela
         Phone: (58) (212) 707.62.80
         Fax: (58) (212) 707.63.52

         Web site:

* VENEZUELA: Payment Delay Underscores Debt Management Concerns
The Venezuelan government's apparent delay in payment on oil-
indexed payment obligations and its failure to cure the problem
more promptly are evidence of deficiencies in its debt
management capacity,' according to Morgan C. Harting, Senior
Director and Sovereign analyst for Fitch Ratings, "the situation
also underscores general concerns about willingness to pay."

These risks are factored into Fitch's 'B+' rating and Stable
Outlook on the Republic's long-term foreign currency debt and
will continue to constrain the ratings. The establishment of a
special account to meet obligations related to the oil-indexed
instrument is viewed favorably and bolsters the credibility of
the government's stated intention to pay once the amount owed is
determined. Officials estimate that the final determination will
take one to two months. In Fitch's view, administrative
shortcomings that contributed to the payment delay on the oil
obligations are not expected to bear directly on the republic's
capacity to make payments on bonds because principal and
interest payments owed on bonds are more clearly defined and do
not depend on assessments by third parties.

The Venezuelan Ministry of Finance reported Wednesday that it
would set aside US$30 million in a special account with its
fiscal agent for late payments plus interest owed in respect of
its oil-indexed payment obligations. The obligations were issued
in 1990, together with discount and par bonds as part of the
Brady restructuring. Fitch rates the discounts and pars 'B+',
consistent with Venezuela's long-term foreign currency rating.
Holders of the obligations are entitled to a payment of up to
US$3 per obligation on the 15th of October when Venezuela's oil
export price exceeds a reference price during the preceding year
through Aug. 31. The amount owed is determined by an independent
calculation agent, based on information received from state-
owned oil company Petroleos de Venezuela (PDVSA) and other
sources. Delays in the provision of relevant information by
PDVSA may have prevented the calculation agent from reporting
its determination of whether a payment is owed and, if so, in
what amount. Ministry of Finance officials have acknowledged
that it expects the calculation agent to report that some amount
was owed but not paid on Oct. 15, 2004.

These concerns notwithstanding, Venezuela's creditworthiness was
supported once political uncertainty subsided, following a
presidential recall referendum in August. International
liquidity has also improved as a result of higher oil prices.
International reserves now stand at US$23.5 billion, well in
excess of this year's estimated $5.4 billion in interest and
principal obligations on the central government's external debt.

Longer term, credit risk remains quite high because of
volatility in government revenues, half of which are directly
related to oil. The structural fiscal balance has clearly
deteriorated over the past year: rapid increases in public
revenues, most of them either directly or indirectly oil-
related, have been matched by similar boosts in spending,
preventing the government from erasing its deficit during a
bonanza year. As oil prices decline in the future, it will
likely prove difficult to reduce government expenditures
commensurately, so the nominal deficit could increase unless
there is a devaluation to increase the local currency value of
oil revenues. Such moves raise the value of public debt relative
to GDP and could have political costs because they reduce
purchasing power. Fitch believes that policymakers would
nonetheless choose to devalue in the event of stress from lower
oil prices or wide misalignment of the official and parallel
exchange rates, although this might come only after significant
depletion in international reserves.

Compared with other 'B' range sovereigns, Venezuela stands out
for its very low net public external debt position and its
superior external liquidity. Public debt is also below average
and contracted at relatively low interest rates, keeping current
financing requirements lower than most peers. These strengths
should allow the government to weather considerable revenue
shocks over the next two years, as it did over the past two.

In the event of a sustained decline in oil prices or a
disorderly easing of capital and import controls, international
reserves would come under pressure, diminishing key external
strengths. Also, over the longer term, debt dynamics could
deteriorate absent improvements to the significant structural
deficit and meager prospects for sustainable economic growth.

CONTACT:  Morgan C. Harting +1-212-908-0820
          Roger Scher +1-212-908-0240, New York

MEDIA RELATIONS: Kenneth Reed +1-212-908-0540, New York


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
Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick,
Maryland USA. John D. Resnick, Edem Psamathe P. Alfeche and
Lucilo Junior M. Pinili, Editors.

Copyright 2005.  All rights reserved.  ISSN 1529-2746.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers.

Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.

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.

* * * End of Transmission * * *