Tuesday, April 24th 2012 - 06:20 UTC

S&P downgrades Repsol’s rating; sees no compensation payment in near-term

Rating Agency S&P announced on Thursday it was downgrading Spain-based energy company Repsol-YPF after Argentina’s government announced the expropriation of 51% of its shares. The rating was lowered from BBB to BBB (minus), the agency said in a statement.

YPF represents 50% Repsol hydrocarbons production and 40% of proven reserves

“Repsol's credit metrics will deteriorate materially as YPF accounted for a significant share of group production and cash flow,” the rating agency alerted.

S&P also gave the company a gloomy perspective. “The outlook is negative, reflecting the potential for a further downgrade if corrective actions to reduce debt do not materialize in 2012. “

S&P also put in check the compensation the Argentine government is willing to pay for the company. “While compensation discussions will be held, we understand any compensation will be determined by a local committee in Argentina, although Repsol has already initiated international arbitration.

“Our assumptions do not include any near-term repayment of the loan to the Petersen group, as repayment was dependent on cash dividends the Petersen group was to receive from YPF and which are now uncertain.”

YPF represents over 50% of Repsol’ total production of hydrocarbons and 40% of its proven reserves and benefits in 2011 totalled 1.6 billion dollars which represent 25% of the group’s total.

YPF daily production last year was 495.000 bpd and the proven reserves, 1.013 billion equivalent barrels, of which 58% crude and condensates and the rest, 42%, natural gas.

Repsol in 1999 purchased from the Argentine state, 14.9% of YPF and paid 2 billion dollars. Later the Spanish company organized an OPA for the rest of the shares, 83.24%, and took full control of YPF in an operation totalling 13.438 billion dollars.

 

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1 GeoffWard2 (#) Apr 24th, 2012 - 10:23 am Report abuse
Repsol's BBB(-) stands well clear of Argentina's sovereign B(-) ... C,

though both will suffer greatly as a result of CFK's illegal acts of expropriation.

Repsol will evolve and survive to shareholder profitability through its activities elsewhere in the world.

Argentina, on the other hand, has nowhere to go.
All it can do is to survive by selling off its assets to the Chinese ...... because the ('65%') poor peronista voters are unwilling to see the wood for the trees.
2 British_Kirchnerist (#) Apr 24th, 2012 - 12:49 pm Report abuse
See how these capitlaists look out for each other...not!
3 RobWilliams (#) Apr 24th, 2012 - 02:20 pm Report abuse
@2

In the real world, S&P make their informed rating decisions based on actual information rather than 'well, they're capitalist so we should make them REALLY good'

It's not South America, where you expect fundamental loyalty from all due to having a similar socio-economic system.

It's the fact that S&P use logic and not relationships to base their decisions on is the reason that people respect their rating more than an organisation that hides unwelcome figures or just outright lies about them, like the Argentinian government.

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