Fitch Upgrades Petrobras Argentina to BB

Fitch has upgraded Petrobras Argentina to BB from BB minus, with a stable outlook, putting it two notches above Argentina’s country ceiling. The agency cited strong credit metrics, a competitive cost structure, strong internal cash flow, USD denominated export revenues, and support from the Brazilian parent. Another plus is the company’s ability to keep up to 70% of its export revenues offshore. Earlier this year, it further reduced Argentine export flows through asset sales. The agency expects the company’s net-debt-to-Ebitda ratio to drop below1.0x from the1.2x seen on March 31. Of the $1.3bn in total debt, $587m comes from capital market transactions, Fitch adds. “Low leverage mitigates any cash shortfall should price trends reverse or capex needs rise above current levels,” it says.