Argentine state-owned energy firm YPF has seen its bonds and shares take off this year, despite a wider economic malaise, with hope of a shale boom in the South American nation’s huge Vaca Muerta formation luring investors.
The state firm’s bonds have risen between 5%-11% this year, even as some sovereign debt has plummeted as much as 35% amid concerns about near-zero foreign reserves, inflation heading towards 100% and a weakening peso currency. YPF shares are also up some 80%.
Behind the divergence is a major government push to increase production from Vaca Muerta, a shale formation in southern Patagonia the size of Belgium. It is the world's second largest reserve of shale gas and the fourth largest for shale oil.
YPF leads development of the region, seen as key to overturning a deep fiscal deficit and making Argentina a net energy exporter to bring in much-needed dollars.
“The potential for growth there is enormous,” said consultancy Portfolio Personal Investments.
YPF, which held a successful debt swap in 2021 for some $2.1 billion, is also seen to have steadied its financials better than the sovereign, where risks of future defaults remain.
“The company maintains a very good operating and financial performance ... with very healthy credit metrics, among the best in the region,” said Maria Moyano, corporate debt analyst at financial group Adcap.
A source close to YPF said investors had been drawn to the firm’s debt in part by improving macro variables as well as signs of easing foreign exchange restrictions for the sector.
“YPF’s fundamentals have also improved substantially and consistently over the last few quarters of 2021 and 2022,” the person added, asking not to be named.
YPF’s 2026 and 2033 bonds have climbed over five cents on the dollar each this year to some 84 cents and 53 cents respectively, while Argentina’s Global 2038 has sunk 13 cents to 24 cents on the dollar.
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