S&P rates Pampa Energia notes B

S&P said it assigned a B debt rating to Pampa Energia SA's proposed $300 million five-year senior unsecured notes.

The proposed notes will be denominated in Argentinean pesos but payable in dollars and will bear a fixed interest rate.

S&P said the rating on the notes is the same as Pampa’s corporate credit rating because, following consolidation with Petrobras Argentina SA, Pampa has become an operating holding company that generates cash flows on its own, mitigating structural subordination and resulting in no material disadvantage for Pampa's creditors against creditors of its subsidiaries.

The agency expects the company to use the proceeds of the notes to finance capital expenditures, which it already incorporates in the base case.

S&P added that the ratings reflect Pampa Energia's competitive position as a strong player in the Argentine energy sector, which is tempered by exposure to the country's fragile economy and volatile regulatory framework, as well as Pampa's limited geographic diversification.

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