Moody’s ups Pan American Energy to B1

Moody's Investors Service said it upgraded Pan American Energy LLC's (PAE) global local currency rating and Pan American Energy LLC, Argentine Branch's (the Branch) backed senior unsecured ratings, and all the ratings based on the guarantee of PAE, to B1 from B2.

The outlook is stable.

The agency withdrew the domestic senior unsecured bank credit facility of Pan American Energy LLC, Argentine Branch.

"The ratings upgrade was triggered by the rating upgrade of the government of Argentina to B3 from Caa1, on April 15, and by Moody's expectation that PAE will maintain a solid credit profile for its rating category in the foreseeable future," Moody’s senior credit officer Nymia Almeida said in a news release.

"Although PAE's credit metrics deteriorated in 2015 mostly given low oil prices, its credit profile continues to be more consistent with an investment grade rating. In addition, the company has posted a stable operating track record and continues to benefit from growing to stable production and reserve profile.

“PAE has had a successful and stable track record of reserves replacement and production growth at competitive costs even in a high inflationary environment.

“Going forward, amid lower oil prices both locally and internationally, and absent any extraordinary investment, the company will continue benefiting from financial flexibility. However, uncertainties around the oil and gas policies in Argentina, which challenge the company's cash generation in the short- to medium-term, are also incorporated into its ratings."

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