S&P downgrades Repsol-YPF ratings, negative outlook

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

“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.”