• On 21 May 2013, Moody’s announced rating actions on MBIA Insurance Corp., National Public Finance Guarantee Corp., MBIA Inc. and other related entities. Because of the large number of credits across several asset classes affected by these rating actions, including Moody's-rated securities that are guaranteed or "wrapped" by these companies, ratings appearing on this website may not yet reflect current information. For current information on affected credits, please visit www.moodys.com/fig.
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Announcement:

Moody's places Repsol's Baa2 rating on review for downgrade

Global Credit Research - 18 Apr 2012

London, 18 April 2012 -- Moody's Investors Service has today placed on review for downgrade the Baa2 long-term issuer rating of Repsol YPF S.A. ("Repsol") and the Baa2/Prime-2 ratings of Repsol International Finance B.V.'s senior unsecured guaranteed debt. Moody's has also placed on review for downgrade the Ba1 preferred stock rating of Repsol International Capital Limited.

RATINGS RATIONALE

The rating action reflects the recent decision by the Argentinean government to pass a law changing majority control in YPF Sociedad Anónima ("YPF", B3 review for downgrade). As a result, 51% of YPF's Class D shares, all owned by Repsol, could be declared of public interest and subject to expropriation. The Argentinean government's action is expected to reduce Repsol's stake in YPF to 6% from 57%. The government has also approved a presidential decree placing YPF under immediate state supervision and appointed a government minister as controller of the company.

Moody's believes that the expropriation of Repsol from its 51% stake in YPF without adequate compensation from the Argentinean government will result in some significant weakening in the credit metrics of the group. The expropriation will reduce the scale and diversity of Repsol's business profile and increase its relative exposure to the challenged European downstream sector. YPF accounts for around a third of Repsol's proved reserves on a proportional basis, even though it contributed by way of dividend just above 20% of the group's funds from operations in 2011.

Moody's intends to finalise its rating review within the next few weeks. The review will focus on the corrective actions that Repsol's management may take in order to mitigate the effect of the expropriation and shore up the financial profile of the group. The review will also take into account a range of possible compensation scenarios and their impact on the group's financial position. Furthermore, the implications of a potential default by YPF on its own debt will be explored as Repsol's EUR1 billion bond maturing in July 2013 includes a cross default clause with YPF's debt.

WHAT COULD CHANGE THE RATING UP/DOWN

While significant strategic or financial actions would be required to warrant the confirmation of Repsol's ratings at their current level, the review will assess the actions that the Spanish group will implement or consider to adjust its financial profile to its reduced business portfolio in order to protect its investment grade status.

PRINCIPAL METHODOLOGY

The principal methodology used in these ratings were Global Integrated Oil & Gas Industry published in November 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Headquartered in Madrid, Spain, Repsol YPF, is a major integrated oil and gas company with consolidated total proved hydrocarbon reserves of 2.1 billion barrels of oil equivalent (boe) and a strong downstream presence in the Iberian peninsular. In 2011, the group reported consolidated operating revenue of EUR63.7 billion and hydrocarbon production of 290 million boe (including YPF's contribution of 181 million boe).

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The ratings have been disclosed to the rated entities or its designated agent(s) and issued with no amendment resulting from that disclosure.

Information sources used to prepare each of the ratings are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entities, obligations or credits satisfactory for the purposes of issuing these reviews.

Moody's adopts all necessary measures so that the information it uses in assigning the ratings is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entities or their related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

In addition to the information provided below please find on the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead rating analyst and the Moody's legal entity that has issued each of the ratings.

Francois Lauras
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Olivier Beroud
Managing Director
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's places Repsol's Baa2 rating on review for downgrade
No Related Data.

 

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