Moody’s gives B3 to Pampa notes

Moody's Investors Service said it assigned a B3 global scale rating to Pampa Energia SA's proposed up to $500 million Argentine-peso equivalent in global notes due 2022.

The notes will be denominated in Argentine pesos but payable in dollars in New York, at a specified foreign exchange rate. The notes will be registered under Rule 144A/Regulation S and governed by New York law.

The outlook is stable.

Moody’s said the B3 ratings consider Pampa's low to negative free cash flow, although fueled by expansionary capital investments in natural gas and power projects, which have favorable prospects; low interest coverage and low retained cash flow compared to total debt, pro forma for the proposed notes; as well as exposure to volatile, highly-regulated power and oil and gas industries in Argentina.

On the other hand, these factors are mitigated by the company's strategy to focus on businesses with positive pricing outlooks, namely natural gas production and power generation; the expected stable demand for electricity and strong demand for natural gas in Argentina; as well as low foreign exchange risk, the agency explained.

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