Bloomberg News

Argentina Can’t Afford to Nationalize YPF, Banco Santander Says

February 01, 2012

Jan. 31 (Bloomberg) -- Argentina’s government can’t afford to buy YPF SA and is unlikely to do so, Banco Santander SA said after Pagina/12 newspaper reported that officials discussed a takeover of the country’s biggest oil company.

President Cristina Fernandez de Kirchner is pressuring Buenos Aires-based YPF to cut dividends to stem capital flight and bolster foreign reserves, Santander analysts led by Maria Eugenia Fernandez Pouchan said in a report today. Santander has a “buy” recommendation on YPF shares.

Argentine government officials, lawmakers and oil industry specialists discussed re-nationalizing the company that was bought by Spain’s Repsol YPF SA in 1999, Pagina/12 reported Jan 29. YPF’s dividend payment, which will probably be about $1.3 billion this year, would be a “huge hit” on the country’s current central bank reserves of $47 billion, Santander said.

“The government does not have enough resources to nationalize or acquire a stake in YPF,” the analysts said. “The government’s aggressive stance against YPF is meant to pressure the company to reduce dividend payments abroad.”

YPF’s American depositary receipts plunged 10 percent in New York yesterday after the Pagina/12 article. YPF said in a regulatory filing today it isn’t aware of any material changes affecting its share price.

A company official in Buenos Aires declined to comment yesterday. Officials at Argentina’s Planning Ministry didn’t return a telephone call from Bloomberg News seeking comment yesterday.

Price Pressures

Fernandez’s government is likely to increase pressure on YPF and other oil companies to boost production, prevent shortages and keep fuel prices low, Daniel Kerner, a Buenos Aires-based analyst at Eurasia Group, said in a note yesterday.

“It is unlikely that the government would move forward with outright nationalization,” Kerner said. “It doesn’t have the resources to do so and would send a very negative signal to investors. That being said, some government officials are seriously considering nationalizing YPF, and such a move would likely be popular as well as supported by the opposition.”

Repsol, based in Madrid, owns 57 percent of YPF, according to Bloomberg data.

--Editors: Robin Saponar, Carlos Caminada

To contact the reporter on this story: Laura Price in Buenos Aires at lprice3@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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