Repsol SA, fighting to keep its investment-grade rating, agreed to sell a Chilean unit in a deal that will cut debt by about $317 million. The company’s credit default swaps fell the most in 12 days.
The Repsol Butano Chile subsidiary was sold for about $540 million to a group of investors in the South American country, the Madrid-based company said today in a filing. Net capital gains of more than $170 million will be booked on the unit, which holds 45 percent of Lipigas SA, a distributor of liquefied petroleum gas in Chile.
With the deal Repsol has achieved more than 40 percent of the 4.5 billion euros ($5.5 billion) of asset sales targeted in its five-year plan to reduce debt and protect earnings growth.
Repsol’s 5-year swap, a type of insurance against debt default, was the second-best performer among Spanish issuers today. It fell 20 basis points to 434 basis points, second only to a 61 basis-point drop in Melia Hotels International SA. The shares closed 0.6 percent higher at 12.63 euros, matching the 0.6 percent gain in Spain’s IBEX 35 benchmark stock index.
The Argentine government in April seized 51 percent of YPF SA, that country’s largest energy company, from Repsol after saying the company wasn’t investing enough in exploration and production. Repsol shares dropped 47 percent in the first half, the worst performance of the 50-member Euro Stoxx 50 index except for Nokia Oyj, which lost 57 percent in the period.
Repsol’s debt faces a possible downgrade to junk status by Moody’s Investors Service and Fitch Ratings, while Standard & Poor’s Corp. revised its outlook to stable in June.