S&P upgrades Repsol outlook

10th March 2011, Comments 0 comments

Ratings agency Standard & Poor's on Thursday upgraded its outlook for the Spanish oil major Repsol YPF "to positive from stable" due to its improved reserves and likely growth in production.

"Repsol-YPF has improved its reserve position and future production growth is likely, given the number of projects currently being developed," the agency said in a statement.

"The company also improved its financial position in 2010."

S&P has thefore revised its outlook on the group "to positive from stable.

"At the same time, we affirmed our 'BBB' long-term and 'A-2' short-term corporate credit ratings on Repsol-YPF, as well as the 'BBB' issue rating on the company's unsecured debt."

"The outlook revision reflects a strengthening of Repsol-YPF's upstream operating position over 2010, in combination with management's conservative focus on debt reduction, demonstrated by diluting its interest in Repsol-Brazil, and selling minority interest in YPF, and some noncore assets," said S&P credit analyst Per Karlsson.

Repsol last October announced a deal to sell 40 percent of its Brazilian affiliate to China's Sinopec for 7.1 billion dollars (6.6 billion euros). And in December it sold 3.3 percent of its Argentine unit YPF SA to two US investment funds for $500 million.

The turmoil in North Africa is a "negative factor" for Repsol, as roughly 13 percent of the group's production is in Libya and Algeria, S&P said.

But although Repsol has halved it production in Libya due to the upheavals there, the agency said it "could decide" to upgrade the group later in 2011 "depending on how the situation in North Africa develops."

© 2011 AFP

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