Venezuela credit rating on review for upgrade-Moody's

NEW YORK, Sept 19 (Reuters) - Moody's Investors Service put Venezuela's "B2" foreign currency sovereign credit rating on review for a possible upgrade, citing an improved debt position and a good payment track record.

"Venezuela's debt indicators have reported clear and sustained reductions in recent years," Moody's sovereign credit analyst Gabriel Torres said in a written statement.

"But because political concerns have constrained the rating in the past, our review will consider whether the internal political volatility is less likely to impact debt payments than suggested by the current ratings structure," he added.

Venezuela's economy remains too dominated by oil production while political concerns in the past have constrained the rating. However the debt indicators have showed clear and sustained reductions in recent years.

"... our review will consider whether the internal political volatility is less likely to impact debt payments than suggested by the current ratings structure," he said.

Moody's will keep a close watch on how the government handles the drop in oil prices from record highs.

It is high oil prices that have counteracted Venezuela's weak institutions and macro-economic imbalances.

"Given Venezuela's relative lack of economic diversification and its noisy political environment, its susceptibility to event risk is assessed as "high" in Moody's sovereign bond methodology," the statement said.

Moody's "B2" rating is five notches below investment grade. It is also two notches below the "BB-" rating assigned by both Standard & Poor's and Fitch Ratings. (Reporting by Daniel Bases; Editing by Kenneth Barry)