Fitch affirms Petrobras Energia

Fitch Ratings said it has affirmed the international local and foreign currency ratings of Petrobras Energia SA at B- and upgraded the Argentine national scale rating to A (Arg) from BBB (Arg). Fitch has also upgraded the short-term national rating to A2 (Arg) from A3 (Arg).

All ratings have a stable outlook.

Fitch said the national scale upgrade reflects the company's improved financial ratios resulting from an increased cash generation. The ratings also reflect the company's improved liquidity and added financial flexibility as well as continued achievement of productivity and efficiency gains.

The company's strong level of dollar-denominated revenues and significant cash generation outside of Argentina provide further support for the ratings.

Notwithstanding these strengths and improvements, the company's credit profile continues to reflect fallout from Argentina's sovereign crisis. The ongoing sovereign default, the shift in government policies away from market-oriented frameworks, recent heightened concerns regarding the integrity of the local energy market (specifically natural gas) and the government's continued lack of addressing systemic sector problems remain as constraints, primarily on the international rating.

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