YPF Rises to 29-Month High on Bond Proceeds: Buenos Aires Mover

YPF SA, Argentina’s largest energy company, surged to its highest value in more than two years as the country negotiates at least $1 billion of funding for a bond whose proceeds will be invested in oil and gas projects.

YPF gained 7.2 percent to close at 197 pesos in Buenos Aires, after rising earlier as much as 8.2 percent. The stock has almost doubled in price this year to reach the highest level since May 29, 2011. Its American depositary receipts jumped 6.8 percent to $21.57 in New York.

Bridas International, an Argentine energy company run by the billionaire Bulgheroni brothers, said Oct. 2 it will invest $500 million in the government bonds that will pay a 4 percent coupon and mature in 2016. Other companies will follow Bridas and grain exporters as the nation looks to attract funds to tap shale oil and natural gas deposits to close a widening energy deficit, said Ruben Pascuali, an analyst at Mayoral Bursatil.

“The gain is obviously because of the new cash the company is going to get after this week,” Pascuali said by phone from Buenos Aires. “Proceeds from the energy bonds will go to YPF’s exploration program.”

In addition to Bridas, Argentine grain exporters are holding talks with authorities to buy another $500 million of government energy bonds, according to two people involved in the discussions who aren’t authorized to speak publicly as talks are ongoing.

Repsol Settlement?

There’s also speculation that YPF is coming closer to settling an investment dispute with Spain’s Repsol SA. YPF Chief Executive Officer Miguel Galuccio told Spanish newspaper Expansion Oct. 3 that the conflict will be resolved by year-end either by “the negotiated route or the legal route.”

“This is positive for YPF because it would pave the way for it to form partnerships and draw investment,” Santiago Wesenack, a Raymond James Argentina energy equity analyst, said in a telephone interview from Buenos Aires.

Argentina seized YPF, the country’s largest oil company, from Spain’s Repsol in April 2012 after criticizing rising oil imports and a lack of investment.

Kristian Rix, a spokesman for Repsol, declined to comment in a telephone interview from Madrid.

YPF should continue rallying as the share price in pesos doesn’t factor in the currency’s depreciation, Pascuali said. The Argentine peso has lost 15 percent this year against the U.S. dollar.

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