Fitch Affirms YPF S.A.’s IDRs at ‘CCC’

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Fitch Affirms YPF S.A.’s IDRs at ‘CCC’

July 20, 2015 03:04 PM Eastern Daylight Time

NEW YORK–(BUSINESS WIRE)–Fitch Ratings has affirmed the foreign and local currency Issuer Default Ratings (IDRs) of YPF S.A. (YPF) at ‘CCC’ and ‘B-‘, respectively. Fitch affirms the company’s long-term international bond ratings at ‘CCC’ and assigns an ‘RR4’ recovery rating to the company’s international senior unsecured bonds. The ‘RR4’ Recovery Rating for the company’s senior unsecured notes outstanding reflects an average expected recovery given default and is in line with the RR soft cap established for Argentina.

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Brazil Real Rises as Central Banker Sees Higher Interest Rates

Brazil’s real climbed for the first time in four days as a central bank official said policy makers should keep raising interest rates, making the nation’s assets more attractive to global investors.

The currency led regional gains as Tony Volpon, the bank’s risk-management director, said 2016 inflation expectations need to drop to the official target of 4.5 percent. His comments came a day before a government report that is forecast by economists to show consumer prices increased 9.26 percent in the year through mid-July, the fastest pace since 2003.

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Dilma’s Tightrope Ordeal

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If Brazil’s President Dilma Rousseff thought it was tough imposing austerity measures in the first half of the year, she may be in for some unpleasant surprises in the second.

She has lost support from Senate Chief Renan Calheiros and his lower-house counterpart, Eduardo Cunha, amid growing discontent with a recession and a corruption probe into legislators. Calheiros, who likened Brazil’s atmosphere to a horror movie with no end in sight, and Cunha are pushing for inquiries into alleged wrongdoing at federal institutions and have delayed votes on key bills designed to raise revenue.

While Cunha’s Democratic Movement party, the largest in the ruling alliance, hasn’t followed his lead by abandoning the government, many of its legislators want to distance themselves from Rousseff’s unpopular austerity measures, said political analyst Gabriel Petrus. Lawmakers may step up dissent as prosecutors intensify probes into more than 50 politicians on allegations of graft.

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Exclusive: Peru sending prosecutors to Brazil as corruption probe goes regional

Peru's Attorney General Pablo Sanchez talks to Reuters during an interview at his office in Lima,  July 17, 2015. Picture taken July 17, 2015. REUTERS/Mariana Bazo
Peru’s Attorney General Pablo Sanchez talks to Reuters during an interview at his office in Lima, July 17, 2015. Picture taken July 17, 2015. REUTERS/Mariana Bazo

Peruvian prosecutors plan to visit Brazil this month to gather evidence of bribery on a transcontinental highway project, Peru’s attorney general said in an interview, adding to regional fallout from the biggest corruption scandal in Brazil’s history.

The mission laid out by Peruvian Attorney General Pablo Sánchez is the most public sign yet of international cooperation on a case that has jailed heads of major Brazilian engineering groups as police comb bank records for evidence of a cartel.

Regional interest in the probe exploded last month, when Brazilian police arrested the chief executive of Odebrecht SA [ODBES.UL], Latin America’s biggest construction company. His arrest has put billions of dollars worth of infrastructure projects in the region under fresh scrutiny.

Ecuador opened audits of Odebrecht’s contracts. Colombia’s vice president warned that the company could be banned from public bids for decades. Investigators in the United States and Panama have also been collaborating with Brazilian authorities.

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Key Latin American stock indexes and currencies at 1720 GMT

 Key Latin American stock indexes and currencies at 1720 GMT:

 Stock indexes                 Latest    Daily  YTD pct
                                           pct   change
                                        change  
 MSCI Emerging Markets         934.47    -0.77    -1.53
                                                
 MSCI LatAm                  2,426.18    -0.92   -10.23
                                                
 Brazil Bovespa             51,819.92       -1     3.62
 Mexico IPC                 45,593.09     0.59     5.67
 Chile IPSA                   3918.15     0.46     1.74
 Chile IGPA                 19,035.25     0.41     0.87
 Argentina MerVal           12,183.85    -1.56    42.02
 Colombia IGBC               9,989.33    -1.48   -14.14
 Venezuela IBC              15,125.78     1.59   291.99
                                                       
 Currencies                    Latest    Daily  YTD pct
                                           pct   change
                                        change  
 Brazil real                   3.2148    -0.70   -17.34
 Mexico peso                   15.997    -0.43    -7.83
 Chile peso                    649.25    -0.54    -6.60
 Colombia peso                  2,760    -0.04   -13.48
 Peru sol                      3.1851    -0.09    -6.47
 Argentina peso                9.1500    -0.03    -6.56
 (interbank)                                    
 Argentina peso                 14.37    -1.04    -2.57
 (parallel)

Shrinking Shallow-Water Drilling in the U.S. GOM

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Energy producers are abandoning the search for oil and natural gas close to shore in the U.S. Gulf of Mexico as drilling budgets shrink and exploration migrates to land-based shale fields.

The number of permits for new wells in seas less than 500 feet (152 meters) deep plunged 74 percent to nine during the first six months of this year from a year earlier, according to the U.S. Bureau of Safety and Environmental Enforcement.

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First Brazilian Executives Sentenced as Petrobras Probe Advances

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Two former executives of Camargo Correa SA received sentences exceeding 15 years from a judge handing down the first punishments to builders in Brazil’s biggest-ever corruption scandal.

Judge Sergio Moro sentenced ex-President Dalton Avancini along with Eduardo Leite, the conglomerate’s former vice president, to 15 years and 10 months for corruption, money laundering and organized criminal activity. Both had previously turned state’s witness. Moro also sentenced Joao Ricardo Auler, a former chairman, to nine years and six months for the same offenses. The three will serve part of their sentences under house arrest.

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Oil Prices Hurt Currencies

Crude oil’s worst run in four months is hurting more than just commodity traders.

Currencies from the Norwegian krone to Brazil’s real are tumbling as investors revise economic growth expectations for petroleum-exporting nations. Mexico’s peso slumped to its weakest since a 1993 revaluation, while the Canadian dollar fell to a six-year low.

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Oil Guru Who Called 2014 Slump Sees Return to $100 Crude by 2020

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The oil guru who predicted last year’s rout said $100-a-barrel crude is likely to return within five years as faltering supply fails to meet demand.

Gary Ross, the founder of consultants PIRA Energy Group, said oil markets aren’t nearly as oversupplied as many believe and spare capacity is tight since Saudi Arabia is pumping all the crude it can without new drilling.

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