Fitch rates YPF notes CCC

Fitch Ratings said it assigned a rating of CCC/RR4 to the proposed exchange of notes due 2025 for YPF SA’s $1 billion of unsecured notes due 2021.

The rating reflects Fitch’s view the transaction is not a material reduction in the original terms of the transaction, the agency said.

The exchange comprises a 10% cash pay-out and 95% of the original principal to be refinanced during the early participation date period expiring on July 16. Thereafter, the cash payout will be 5%, with the remaining 95% to be refinanced, expiring on July 30. YPF is offering the same coupon of 8½%, and the new bonds will rank pari-passu in priority of payment with all of its present and future unsubordinated and unsecured obligations with the covenants being unchanged.

“YPF’s ratings continue to be rated in line with Fitch’s government-related entities (GRE) criteria. Nonetheless, the Argentine sovereign rating is RD following the failure of the authorities to pay interest due on three sovereign bonds within the stipulated 30-day grace period that expired on May 22, 2020. The sovereign continues to negotiate with creditors for a comprehensive restructuring of its external bonds. Fitch believes that YPF’s ratings are in line with the country ceiling of Argentina, which at CCC represents that default is a real possibility,” the agency said in a press release.

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