On Nov. 1, 2006, Standard&Poor's Ratings Services revised the CreditWatch implications on its 'B+' long-term foreign currency corporate credit rating on Petroleos de Venezuela S.A. (PDVSA) to positive from developing. The revision of the CreditWatch status on PDVSA reflects our expectations that downgrade risk has receded, and the issuer credit rating will either be raised and equalized with the rating on PDVSA's owner, the Bolivarian Republic of Venezuela (BB-/Positive/B), or affirmed at 'B+'. The change in CreditWatch status reflects increased availability of financial reporting information from PDVSA. We have received 2005 audited information and up-to-date operating data, which indicate strong profitability and modest leverage, but also confirm our concerns regarding increased social spending and its impact on PDVSA's
