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Venezuela's finance minister arrived in Russia today ahead of the expected signing of a debt restructuring deal with one of its main creditors, during a crisis that has seen Caracas declared in partial default.
The country is seeking to restructure its foreign debts, estimated at around USD 150 billion, after it was hit hard by tumbling oil prices and American sanctions.
S&P Global Ratings meanwhile said it had placed Venezuela's state-owned oil company PDVSA in "selective default" after it failed to make its interest payments on some of its debt.
The ratings agency this week declared the country in selective default after it failed to make $200 million in payments on two global bond issues.
Fitch also downgraded PDVSA and cash-strapped Venezuela over delayed payments, but Caracas insisted it was in the process of paying up.
Moscow and Caracas have been negotiating for months the terms of a deal that would restructure almost USD 3 billion- worth of debt taken out in 2011 to finance the purchase of Russian arms.
A diplomatic source told AFP that Venezuela's finance minister Simon Zerpa had arrived in Moscow ahead of a signing expected to take place later Wednesday.
Anton Tabakh, chief economist at the RAEX rating agency, said it was "normal" that Moscow was continuing to restructure Caracas's debts.
The move allows "both parties to save face and gain time, because now the issue of Venezuelan debt simply cannot be resolved, even formally," he told AFP.
Caracas has only USD 9.7 billion in foreign reserves and needs to pay back at least USD 1.47 billion in interest on various bonds by the end of the year, and then about USD 8 billion in 2018.
Russia and China are the two main creditors and allies of Venezuela, which owes them a total of $8 billion and $28 billion respectively.
The Chinese foreign ministry on Tuesday said it believed the "Venezuelan government and people have the ability to handle the debt issue of their country," adding that financial cooperation was "proceeding smoothly".
In response to the downgrading from ratings agencies, Communications Minister Jorge Rodriguez said Venezuela was already catching up on the payments.
"Today, we have begun interest payments on Venezuela's foreign debt and last week, PDVSA made its debt interest payments," he said on state television Tuesday.
"We pay our debts, despite what the ratings agencies, the US Treasury, the European Union or (US President) Donald Trump say."
A committee of 15 financial firms meeting in New York meanwhile put off a decision for a third straight day on whether to declare a "Failure to Pay Credit Event" at PDVSA.
They will reconvene Thursday to determine whether holders of PDVSA debt with default insurance -- credit default swaps -- can collect payment.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)