(RTTNews) - Fitch downgraded Venezuela's credit rating to 'CC,' from 'CCC,' claiming that the risk of a default on the Venezuelan debt increased after the imposition of economic sanctions by the United States government.

"The sanctions prohibit U.S. persons or entities based in the U.S. from a series of financial transactions with the government and PDVSA, including any dealings in new debt as well as dealings in certain existing bonds owned by the Venezuelan public sector and dividend payments to the government of Venezuela," the agency noted.

Fitch affirmed that before the sanctions Venezuela already had a low external liquidity, with the international reserves and the foreign assets of the country corresponding to only 33% of the Venezuelan debt with maturity in a year or less. "U.S. sanctions should exacerbate that weakness in external liquidity," Fitch added.

The rating agency noted that the Venezuelan government has shown over the last few years willingness to pay debt interest even in the face of economic problems and political tension in the country, but that the current situation must put that resilience into a test.

"The sovereign faces nearly USD3.7 billion in external amortizations in 2018 (USD2 billion in bond amortizations). External financing needs for 2018 are expected to remain high in the context of a current account deficit and amortization needs," Fitch said.