A USD 1 billion credit line granted to Venezuela's oil giant Pdvsa by a holding of banks through French BNP Paribas was extended for another 12 months, following maturity of the initial term last January 30.

Based on Pdvsa's audited balance as of December 31, 2007, the credit line Pdvsa originally requested from BNP Paribas amounted to USD 1 billion, but at that date, the oil firm owed BNP Paribas USD 1.12 billion, under a loan contracted at a LIBOR-equivalent rate plus a calculated increase based on Venezuela's country-risk. On the debt issue date -January 2007- the increase was 1.15 percent.

Therefore, the state corporation overdrew the original credit line. Experts believe that since Pdvsa has operating on a poor cash flow, the company is very likely to have "swept" the credit line. They suggest the credit line may have been used to repay some liabilities, thus bringing up the original amount of money.

According to Pdvsa's debt balance, prepared by KPMG's auditors Alcaraz, Cabrera & Vázquez, a prerequisite for BNP Paribas to extend the credit line is authorization by lenders holding more than 50 percent of the original sum.

In such cases, the lenders usually request the borrower to provide updated financial information to be forwarded to the concerned banks, in order to decide on the extension of payment date.