The ratings on Petroleos de Venezuela S.A. (PDVSA) and its sole shareholder, the Bolivarian Republic of Venezuela (BB-/Stable/B), are tightly linked, reflecting our opinion that PDVSA is a public policy-based institution that plays a central role in meeting the sovereign's political and economic objectives. The ties of ownership and economic interests between PDVSA and Venezuela are evident in the significant contribution of the oil industry to government revenues (50%) and the country's exports (90%). The sharp increases in direct social spending by PDVSA and recent investments in nonoil-related assets provide further support to our opinion. The ratings assigned to PDVSA also consider the inconsistencies observed in reported production figures versus those of other sources and the absence of an external
