...PDVSA Linkage Key Rating Constraint: Fitch Ratings' criteria generally guides to a maximum of two notches between a weak parent and stronger subsidiary but allows for discretion in other cases, including wider notching under circumstances where the parent may be heading for bankruptcy, while the subsidiary operates with little risk of a consolidated bankruptcy filing or if there is robust contractual ringfencing. However, Fitch believes the ratings linkage could potentially increase following PDVSA's proposed secured debt exchange. Legal Separations Justify Linkage: CITGO Petroleum Corp.'s (CITGO) notching from parent, Petroleos de Venezuela, S.A. (PDVSA, CCC) is informed by structural and legal separations; restrictions on dividends to CITGO Holding Inc. (HOLDCO) and thereby to PDVSA; and the existence of Delaware C-Corps between PDVSA and the CITGO operating companies. Fitch believes PDVSA creditors may try to attach CITGO assets following a default, but would have limited potential for...
