When Javier Milei ran for president in Argentina’s 2023 elections, he promised to sell off public enterprises, with the state-owned oil and gas company, YPF, at the top of his list.
He was elected in November of that year and inaugurated the following month. YPF was slated for sale when he announced a sweeping reform bill shortly after taking office. The president, however, quickly changed his mind and YPF did the unthinkable, quickly going to the market for fresh money.
It placed $800 million bond with a 9.75% coupon on January 10. The deal, which wins the award for Quasi-Sovereign Bond of the Year, was oversubscribed 2.6 times –the largest transaction for an Argentine corporate issuer since 2016, YPF’s first foray into to the capital markets since June 2019 and the first new-money transaction in Argentina since April 2021.
It was a huge boost to Milei’s newly installed government, a milestone for YPF and it opened the Argentine market for other corporates to follow throughout the year. YPF went from the auction block to the centerpiece of the government growth plan.
“This bond was a very important move for the company, industry and the country. It was a very strange moment. The government had just changed and there was a great deal of uncertainty, but we perceived that there was interest in Argentina. We acted and found an opportunity,” says YPF’s CFO Federico Barroetaveña.
YPF used part of the capital to deal with financial obligations, including a $360 million payment that was due in April 2024, and for its investment plans for 2024.
The company has not stopped moving since, with Barroetaveña saying that his first year as CFO – he started in December 2023 – seemed more like a decade because of all that was accomplished. “We have lived with great intensity this past year,” he says.
YPF, under the stewardship of chairman Horacio Marín, came up with a four-pillar strategic plan that includes greater production in the Vaca Muerta unconventional oil and gas formation, financial discipline, operating efficiency and creation of an LNG unit to make Argentina a world-class energy exporter. Vaca Muerta holds 308 trillion feet of natural gas and 16 billion barrels of light crude.
The company complied with the plan and more in the first year. Highlights included selling or transferring conventional blocks to focus on Vaca Muerta, the world’s second largest unconventional formation, establishing a consortium to finance the $3 billion construction of a new oil pipeline that will eventually move up to 700,000 barrels/day of Vaca Muerta crude for export, and setting up Argentina LNG to work on an estimated $30 billion on- and offshore facility on the southern coast. It signed an agreement with Shell in December 2024 to work together on Argentina LNG.
“Our central decision has been to focus on our most profitable asset, which is Vaca Muerta. Production in 2023 was 96,000 barrels/day and our goal was to get to 120,000. We got to 140,000 and are confident we can add another 35% in 2025,” says Barroetaveña.
YPF’s goal, according to Marín, is to export $30 billion in oil and gas by the start of the next decade, making Argentina South America’s second largest producer after Brazil.
Bookrunners/JLMs: Citi; JP Morgan; Santander
Issuer’s Counsel: Bruchou & Funes de Rioja; Cleary Gottlieb
Bookrunners’ Counsel: Milbank ; Tanoira Cassagne
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