Going South?
May 1, 2012
The YPF nationalization plans have spooked investors and multinational companies. What is the fate of Argentina’s issuers?
by Ben Miller
Somewhere between Petrobras and PDVSA. That was the outlook for the characterization of Argentine oil company YPF following the government’s decision to take control of it. Most agree the move will be harmful to the company’s production and to the already-troubled energy sector in Argentina, but less immediately clear were the implications for others in the country.
After months of speculation and subtle threats, the government of Cristina Kirchner submitted legislation to congress in late April declaring all energy supply, refining, distribution and marketing activities to be of public interest, and expropriating the portion of YPF belonging to Spain’s Repsol. Polls in local newspapers showed a majority of Argentines applauding the move. Outsiders with a stake in the country’s economy were less happy.
“This ups the ante,” says Boris Segura, strategist at Nomura. “Argentina has long had an environment seen as unfriendly to business,...
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