Venezuela's state oil firm PDVSA declared in default

Venezuela's state oil firm PDVSA declared in default

Fitch Ratings, meanwhile, said Venezuela and PDVSA are in "restrictive default" due to the delay in payments and the maturity of its debt.

Venezuelan President Nicolas Maduro's government has struggled to pull the country out of an economic downturn following the collapse of oil prices, while United States sanctions have made it harder for the country to operate in worldwide credit markets.

As recently as last month, traders had bought a net $250 million of default protection through the swaps market, according to the International Swaps & Derivatives Association.

Under the agreement, Caracas will pay Moscow back $3.15 billion over 10 years, with minimal debt repayments in the first six years, officials said.

The panel, which took several days to deliberate, will meet next week to discuss whether to hold an auction to set the rate at which the CDS will pay out, ISDA said on its website.

Venezuela, reeling from a four-year recession that has led to widespread shortages of food and basic goods, said on Wednesday it had started transferring $200 million in interest payments on sovereign bonds which mature in 2019 and 2024.

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But S&P Global Ratings declared it in selective default on two of its sovereign bonds early this week after it failed to make the coupons within a 30-day grace period.

ISDA's Determinations Committee for the Americas, comprised of 15 members and including finance industry heavyweights JPMorgan, Goldman Sachs, Elliott Management, Citadel and AllianceBernstein, voted unanimously in favor of the decision. The Venezuelan Government ratified its proposal of a reliable, open and organized mechanism for restructuring the foreign debt, in order to keep its historic tradition as a solvent country that honors all its pledges.

Venezuelan officials blame payment delays on US sanctions, which have made banks warier of dealing with funds from Caracas, thus clogging transfers. ONGC, which is owed dividends for the Sana Cristobal heavy oil project, said PDVSA will use existing crude oil customers or Indian state buyers as intermediaries for payments.

Venezuela has been struggling to make payments on its worldwide bonds amid a crippling economic crisis.

Ratings on those bonds also will be lowered to "D", of default, if not paid on time, it said.

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