S&P affirms Petrobras Energia

Standard & Poor's said it affirmed its B- rating on Argentina-based oil and gas company Petrobras Energía SA's 9.375% series R notes due 2013 after an extra $100 million was issued under the notes. The company's B- corporate credit rating is affirmed.

The outlook is stable.

"The issuance reflects improved financial flexibility, which has been enhanced by Petroleo Brasileiro SA's ownership," said S&P credit analyst Pablo Lutereau. "Proceeds from the issuance will be applied to repayment of short-term financial debt, improving the maturity schedule of the company."

The ratings on Petrobras Energia reflect its relatively aggressive financial profile, high exposure to the Republic of Argentina's changing economic rules, significant need for capital expenditures (to develop its large reserve base), and the uncertainties surrounding the utility business in which the company participates.

The ratings also incorporate the potential support from its main shareholder, Petrobras, the company's strong export profile, geographic diversification, low cost structure, and geological knowledge of the region.

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