Fitch downgrades YPF

Fitch Ratings said it downgraded YPF SA's local-currency issuer default rating to B from B+, its national scale rating to AA(arg) from AA+(arg) and its $50 million of class III notes, ARS 100 million of class V notes and two bond programs for $1 billion each to AA(arg) from AA+(arg).

The outlook on these ratings was revised to stable from negative.

The agency affirmed YPF's foreign-currency issuer default rating at B with a stable outlook and its $100 million of notes due 2028 at B/RR4.

The downgrades reflect the Argentine government's recent announcement that it intends to introduce legislation to nationalize YPF, Fitch said. As a result, YPF's local-currency issuer default rating was downgraded to the same level as the sovereign's B rating.

The agency predicted that ownership by the government will likely lead to greater inefficiencies and lower profitability because government-owned entities tend to incorporate more social strategies into their business strategy.

The company's bondholders can request that YPF repurchase the notes at par plus accrued interest if an event of nationalization takes place and is continuing, Fitch noted. The request can be claimed by bondholders representing 25% of YPF's outstanding domestic and international notes.

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