Fitch Ratings Affirms YPF S.A. Following Possible Petersen Energia Minority Stake.

BUENOS AIRES, Argentina & CHICAGO -- Fitch Ratings has affirmed YPF S.A. (YPF)'s 'BB+' and 'BBB-' foreign- and local-currency Issuer Default Ratings (IDRs) respectively, following the announced sale of 14.9% of YPF to Petersen Energia for USD2.235 billion. Fitch has also affirmed YPF's 'AAA(arg)' national scale rating. The Rating Outlook is Stable.

The affirmations are based on the expectation that the transaction will not result in a significant change in the managerial direction, operational strategy and leverage of YPF. While the transaction has the potential to result in pressure to increase the dividend payout to shareholders to help service the debt at the Petersen Group used to acquire its stake, YPF will continue to have the financial flexibility to cope with a more aggressive dividend policy, its existing investment program and some small amount of additional debt given its strong financial profile and a dominant domestic market share. The entrance of a local shareholder could also be small positive in terms of YPF's relationship with both the local authorities and the business community.

YPF's foreign currency rating 'BB' is rated above the country ceiling rating of 'B+' due to the combination of the company's significant exports, low leverage and ownership by financially strong Repsol YPF. While the rating is above the country ceiling, YPF's foreign currency rating remains linked to the Republic of Argentina's credit profile as government interference and political risk continue to be high. YPF's ratings could be pressured in the event of significant increase in debt levels without associated increases in EBITDA over the near term, and a loss of control or implicit support from Repsol YPF.

Following this initial transaction Repsol YPF (rated BBB+ by Fitch) will reduce its participation in YPF (currently 99%) while maintaining a controlling stake. Initially Repsol will sell 14.9% to Petersen Energia and the Petersen Group will have an option to acquire an additional 10.1% through another related company within the next 4 years. Additionally Petersen Energia and Repsol have agreed that YPF will make an IPO for approximately 20% of its equity, after which Repsol's stake in YPF would be reduced to approximately 51%. Although Repsol will maintain a controlling stake, YPF debt is non-recourse to Repsol YPF. Fitch will monitor the ratings as the proposed transaction is formalized, the new business plan is announced, and its impact on the operations and financial strategy of YPF is evaluated.

YPF S.A. is Argentina's leading energy company, carrying out oil and gas E&P activities, refining, marketing, transportation and distribution of oil and a wide range of petroleum products, oil derivatives, petrochemicals and liquid petroleum gas. The company has three refining plants and produces and sells refining products in the local market, as well as exporting a small portion of its production. The company is controlled by Spain's Repsol YPF (Fitch 'BBB+', Outlook Stable).

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