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(Bloomberg) – Argentina’s state-run oil driller YPF SA has attracted foreign investors with a new dollar-denominated bond to help finance the buyback of existing debt, people said.
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The company sold $800 million in fixed-rate bonds due in 2031, the people said. The note has a price of 99.083 cents to the dollar and a yield of 9.75%, lower than the low 10% range originally negotiated, the people said. The person requested anonymity because he was not authorized to discuss this matter.
The energy giant plans to begin repaying the debt principal in July 2026, giving the bonds a weighted average life of approximately 4.75 years, the people added.
The offering comes as YPF plans to repurchase up to $346 million of its outstanding dollar-denominated bonds due in April. The company said it would pay for the bonds in cash and offer a premium to investors who bid by January 19.
Some investors had questioned whether the bonds offered high enough yields to offset the risks, as President Javier Millay looks to make some of his economic campaign promises a reality. “This is difficult to consider with the Millais battle looming in Parliament,” said Omotunde Lawal, head of emerging corporate bonds at Baring Investment Services in London.
Millais has said she wants to privatize state-owned companies and has named YPF as her ultimate target during the campaign. The president can seek to privatize companies through legislation, but he would need support from Congress, where his party is in the minority.
Analysts at S&P Global Ratings said the focus remains on YPF’s ability to manage its debt. “We view this transaction as opportunistic,” analysts Diego Ocampo and Amalia Blasios wrote this week, referring to the company’s share buyback plan. “YPF’s liquidity profile remains strong with significant cash reserves, adequate access to domestic markets, and manageable short-term debt maturities.”
The company had about $1.3 billion in cash at the end of September, according to S&P. Analysts placed YPF’s credit rating deep in CCC- and junk territory, affirming its negative outlook. Fitch Ratings assigned YPF a CCC score three notches above default, and Moody’s Investors Service rated the company Caa3.
Citigroup, JPMorgan Chase & Co. and Santander are managing bond trading. A YPF spokesperson did not respond to a request for comment.
–With assistance from Esteban Duarte.
(Updates second paragraph with pricing details.)
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