| NEW YORK
NEW YORK Venezuela, under pressure to ease scarcities including milk, is likely to embark on large-scale foreign borrowing that will be "multiples" of what it had been in previous years under the administration of the late socialist President Hugo Chavez, a senior analyst for the Moody's ratings agency said.
Speaking on Tuesday at the Reuters Latin America Investment Summit, Mauro Leos, a Moody's senior credit officer, said Venezuela would likely borrow via bonds issued by state oil firm PDVSA.
"Our conclusion is at the end of the day what Venezuela (is) going to do is borrow more than they had to before; they need dollars," he said. "There are supply problems across the economy."
Moody's is still running its calculations to see how much Venezuela will borrow in capital markets but he added he thought the country would have to "borrow multiples of what it borrowed before."
Despite its oil wealth as an OPEC member country, Venezuela is struggling with shortages of basic goods such as wheat flour and even toilet paper, in part because limited dollar disbursements have left businesses unable to import raw materials and consumer products.
Venezuela has historically depended on imports to supply key consumer goods, including much of its food. Critics say Chavez's sweeping nationalizations and aggressive regulations weakened the private sector and left the country more dependent on imports.
"The distortions that have been introduced over the last 10 years are finally having an impact," Leos said. "The lack of supply does not have to do with excessive demand, everything is lacking."
VENEZUELA'S BIG BOND ISSUES OF RECENT YEARS
The government of Venezuela has over $33 billion in outstanding debt in dollars. Its last major foreign bond issue was a $4.2 billion dollar-denominated bond in 2011, according to Reuters data.
State-owned oil company PDVSA has about $31 billion in dollar-denominated foreign debt. More than $7 billion of that was issued in 2011, according to Reuters data.
In 2012, PDVSA issued $3 billion in debt, less than in each of the prior three years.
Leos said that Venezuela in 2012 relied heavily on local borrowing and financing from China.
Despite the tight supplies of dollars, Leos saw no imminent prospect of a default by Venezuela on its debt.
Moody's credit rating on Venezuela is B2, deep into speculative grade territory known as "junk."
B2 is five levels below investment grade, the rating enjoyed by all major economies in Latin America except for Argentina and Venezuela. Investment grade countries usually pay much less to borrow than those rated junk.
The two other main Wall Street ratings agencies - Standard & Poor's and Fitch - each have a B-plus rating on Venezuela, four levels below investment grade.
All three of the ratings agencies have a negative outlook on Venezuela's debt, which means there is a significant - though far from definitive - possibility the country's credit rating could be further downgraded.
After Chavez's death on March 5, his vice president Nicolas Maduro took over as acting president. In the April 14 presidential election, Maduro won a narrow victory, according to official returns disputed by the opposition.
(Editing by Andrew Hay)