S&P lowers YPF

Standard & Poor's said it lowered the long-term local-currency corporate credit rating on YPF SA to BB from BB+ and placed the rating and long-term foreign-currency corporate credit rating on CreditWatch negative.

The downgrade reflects the perception that the corporate sector in Argentina faces tougher challenges and that overall credit quality has weakened given a riskier business environment for companies operating in the country, according to the agency.

Ratings reflect the challenges of operating in the highly uncertain and rapidly changing economic and regulatory environment in Argentina, a geographically concentrated reserve base, very weak reserve replacement ratios and an aggressive dividend policy, the agency said.

Those factors are partially offset by YPF's moderate debt, vertical integration of its operating units, its dominant market position in Argentina and potential support from Repsol-YPF SA (BBB/stable/A-2), S&P said.

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