REFILE-UPDATE 1-S&P revises down Venezuela's sovereign credit outlook to negative

Fri Apr 19, 2013 3:46pm EDT

By Daniel Bases

April 19 (Reuters) - Standard & Poor's on Friday revised down its sovereign credit outlook on Venezuela to negative from stable, citing the close presidential election, questions about the vote's legitimacy and the increase in political uncertainty.

The current B-plus rating of the OPEC-member nation of 29 million people was affirmed, S&P said in a statement.

"The outlook revision reflects growing political uncertainty that could weaken the implementation of economic policies and possibly undermine governability following the presidential elections of April 14," the firm said.

Nicolas Maduro, a bus driver-turned-foreign minister who became the late Hugo Chavez's chosen successor, was sworn in as the new president on Friday. He narrowly beat opposition challenger Henrique Capriles in a vote last Sunday.

Capriles insists opposition figures show he won the election. Official figures say he got 49 percent of the ballots versus 50.8 for Maduro.

"The negative outlook signals the possibility that a politically weakened president and administration may pursue less pragmatic, more interventionist policies that increase imbalances in the economy and result in greater instability. We could lower the rating by one notch under such a scenario," S&P said.

Venezuelans vote electronically, but the machines also print out paper receipts of each vote that are kept in boxes. A decision to widen an electronic audit of the vote took some heat out of the dispute over the poll.

Capriles accepted the National Electoral Council's decision, although it fell short of the manual recount he had wanted.

"The election results add to the already high level of unpredictability that characterizes Venezuela's economic policy and its legal and policy framework, which constrain the sovereign credit rating," S&P said.

"The country's vast oil and gas reserves, the government's relatively low debt burden, and its net external asset position continue to support the rating," the statement said.

Venezuela is rated B-plus with a negative outlook by Fitch Ratings while Moody's Investors Service is one notch higher at B2, also with a negative outlook.