Moody's upgrades Repsol

Moody's Investors Service said it upgraded Repsol SA's issuer rating to Baa2 from Baa3, Repsol International Finance BV's senior debt ratings to Baa2/Prime-2 from Baa3/Prime-3 and Repsol International Capital Ltd.'s preferred stock to Ba1 from Ba2. The outlook is stable.

The rating action follows the recent announcement by Repsol that it has sold the bulk of the sovereign bond portfolio it received from the Republic of Argentina on May 8 under the agreement reached between the two parties in compensation of the expropriation of Repsol's controlling stake in YPF Sociedad Anonima (Caa1/stable).

The agency said the early monetization of the Argentina sovereign bonds and the sale of the remaining stake in YPF remove the overhang associated with the YPF expropriation and significantly enhance the group's financial flexibility. In Moody's view, this should enable the company to continue strengthening its upstream portfolio while ensuring some material improvement in its overall financial profile.

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