Fitch Ratings has assigned a 'CCC' rating with a Recovery Rating of 'RR4' to
The proceeds of the notes will be used to prepay existing debt and for general corporate purposes. Fitch currently rates YPF's Long-Term Foreign and Local Currency Issuer Default Rating (IDR) 'CCC'.
YPF's ratings are in line with Fitch's 'Government Related Entities Criteria'. The company is majority owned by the government of
Key Rating Drivers
Links to Sovereign: YPF linkage to the
YPF's Standalone Credit Profile (SCP) is in the 'b' category, reflecting the issuer's production cost profile, which is above average compared with peers in the region, and its inability to diversify its operations outside of
Key Producer in Volatile Operating Environment: YPF is the market leader in the country with over 50% of market share for refined products. The company's strong market position and branding give it the ability to adapt to market volatility. YPF's dominating participation along the value chain of fuels, combined with the largest acreage under license for production of crude and gas, position the company to benefit from current efforts to shift
Stable Production and High-Cost Profile: Fitch's rating case assumes production will average 600,000 barrels of oil equivalent per day (boed) over the rating horizon. Fitch estimates YPF's 2023 half-cycle and full-cycle costs at
Financial Metrics Strengthen: YPF has maintained a moderate leverage profile. Fitch estimates YPF's total debt/EBITDA will be 1.3x in 2024 compared with 1.8x in 2023 and will average less than 1.0x over the rated horizon. YPF's reported 1,072 mmboe of 1P reserves in 2023, translating into total debt to 1P of reserves of
Derivation Summary
YPF's linkage to the sovereign is similar in nature to its Latin American national oil company peers, namely
The closest peers for YPF's upstream business are
YPF has an adequate capital structure, with a gross leverage ratio, defined as total debt/EBITDA, of 1.8x in 2023 (in USD terms) and total debt/1P of
Unlike its peers ENAP,
Key Assumptions
Average gross production of 600,000boe from 2024-2027;
Realized oil price of
Natural gas prices rise to
Average annual capex of roughly
Downstream sales volume follows Real GDP forecasts and YPF is a net purchaser of crude;
Effective tax rate of 35%;
No dividend payments over the rating horizon;
Rollover of short-term maturities.
Recovery Analysis
Key Recovery Rating Assumptions
The recovery analysis assumes that YPF would be liquidated in bankruptcy rather than reorganized via going-concern;
We have assumed a 10% administrative claim.
Liquidation Approach
The liquidation estimate reflects Fitch's view of the value of balance sheet assets that can be realized in sale or liquidation processes conducted during a bankruptcy or insolvency proceeding and distributed to creditors;
Inventory advance rate of 50%;
YPF has a material joint venture with international oil companies that results in a reported book value of
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A downgrade of
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
The Foreign Currency IDR is linked to
Liquidity and Debt Structure
YPF reported
Issuer Profile
YPF has been controlled by the Argentine government through its majority stake of 51% since 2012.
Date of Relevant Committee
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
ESG Considerations
The company has a Governance Structure score of '4', due to its nature as a majority government-owned entity and the inherent governance risk that arises with a dominant state shareholder, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
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