Moody’s confirms Repsol

Moody's Investors Service said it confirmed Repsol SA's Baa2 issuer rating and the Baa2/provisional Baa2 guaranteed long-term debt and Prime P-2/provisional P-2 commercial paper ratings of Repsol International Finance BV.

The Ba1 ratings for Repsol International Finance BV's junior subordinated notes were also confirmed, along with Repsol Oil & Gas Canada Inc.'s (formerly Talisman Energy Inc.) Baa3/provisional Baa3 long-term debt ratings.

The outlook is negative.

The confirmations with a negative outlook reflect pressure on Repsol's earnings and cash flow protection from sustained oil price weakness as well as execution and integration risks related to the company's strategic plan.

This action concludes the review for downgrade announced Jan. 22.

"We expect Repsol to generate negative free cash flow and show weaker cash flow protection metrics in 2016 and 2017 under our lower oil price scenario. Still, management has levers to pull to maintain financial flexibility, and its cash flow profile will continue to benefit from a strong refining and marketing franchise in Spain," Moody’s senior vice president Tom Coleman said in a news release.

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