Moody’s improves YPF’s rating thanks to its divestment plan in conventional assets and its focus on unconventional hydrocarbons, highlighting its growth potential.
The risk rating agency Moody’s improved the rating of the Argentine state oil company YPF, positively highlighting its divestment plan in mature blocks and its commitment to unconventional hydrocarbons. Moody’s Local Argentina raised YPF’s long-term local and foreign currency issuer rating to ‘AAA.ar’ (high quality investment) from ‘AA+.ar’, and the senior secured debt note in foreign currency to ‘ AAA.ar’ from ‘AA+.ar’. In addition, it assigned a rating of ‘AAA.ar’ to YPF’s Class XXX negotiable obligations. All ratings have a ‘stable’ outlook.
Moody’s justified the rating upgrade by its view that the plan to divest from conventional assets will allow YPF to improve efficiencies and increase its profitability. The rating agency also valued the new infrastructure works in the sector and a more favorable regulatory framework, which will allow YPF to increase its export balance and reduce its exposure to local economic volatility. Moody’s highlighted YPF’s solid competitive position as the main integrated company in the Argentine energy sector and its high financial flexibility with access to local and international debt markets.
On June 7, YPF received nearly 60 offers from 30 national and international companies interested in acquiring conventional areas that the oil company plans to leave to concentrate on the formation of unconventional hydrocarbons in Vaca Muerta. The divestment plan in conventional assets, which represent 25% of YPF’s total production, will allow the company to free up investments to accelerate the development of unconventional crude oil in Vaca Muerta and improve its profitability margins.
Moody’s expects YPF to continue focusing its investments on the development of unconventional crude oil and gas in Vaca Muerta, increasing production and allocating a considerable portion to external markets. The company, whose shares are listed on the New York and Buenos Aires stock exchanges, assigned a book value of $1.8 billion to the conventional assets offered, or $1.2 billion after taxes.
