Oil and gas producers Pampa Energia S.A. and state-owned YPF S.A. and nine other Argentine companies had their local and foreign currency ratings lowered to ‘CCC-’ from ‘CCC+’ by S&P Global Rating. They now all have a negative outlook.
Both producers are vital to Argentina’s larger plans to boost oil and gas production to support ongoing efforts to increase export potential over the near-to-long-term.
The actions come after S&P on March 29 lowered Argentina’s long-term foreign currency rating and transfer and convertibility (T&C) assessment to ‘CCC-’ from ‘CCC+,’ S&P said March 31 in an emailed statement.
The outlook for the entities “is negative, reflecting potential further restrictions to access and/or transfer funds abroad in the near future, including regulations forcing these companies to unilaterally restructure their foreign-currency debt maturities, as was the case in early 2021, a situation that we typically view as tantamount to default,” S&P said.
“The outlook and the ratings also incorporate the chances of a deeper recession, hurting these entities’ ability to generate enough revenue in domestic currency to convert into the needed funds for servicing the foreign-currency obligations,” S&P added.
Other companies on the list include:
- Aeropuertos Argentina 2000 S.A.
- AES Argentina Generación S.A.
- CAPEX S.A.
- Compania General de Combustibles S.A.
- CLISA-Compania Latinoamericana de Infraestructura & Servicios S.A.
- Empresa Distribuidora Y Comercializadora Norte S.A.
- Telecom Argentina S.A.
- Transportadora de Gas del Sur S.A. (TGS)
- YPF Energia Electrica S.A.
S&P’s T&C assessment reflects the agency’s “perception of the risk of the sovereign interfering with the ability of domestic companies to access, convert and transfer money abroad, which is essential for the affected companies to service their financial obligations, many of which are denominated in foreign currency, particularly U.S. dollars,” it said.
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