YPF SA, Argentina’s largest energy company, may face more hurdles to making future dividends after the government ordered oil companies to keep all export revenue within the country, Banco Itau BBA SA said.
YPF pays most of its annual $1.3 billion in dividends outside Argentina and also has “significant” import costs, Itau BBA analysts led by Ricardo Cavanagh in Buenos Aires said today in a note to investors. Yesterday’s decree will probably force YPF to coordinate currency transactions with the central bank to pay future dividends and import costs, the bank said.
President Cristina Fernandez de Kirchner yesterday ordered oil, natural-gas and mining companies such as Xstrata Plc and Pan American Energy LLC to repatriate all future export revenue to try and stem accelerating capital flight from South America’s second-largest economy. YPF exports about $1.5 billion of fuel a year, or about 12 percent of its total sales, limiting the economic impact of the decree to exchange-rate costs, Itau said.
“This is perhaps the most important wake-up call this decree represents, Cavanagh and Paula Kovarsky wrote in the report, referring to the dividends. “Still, our view is that a reduction of YPF’s ability to pay dividends would be the last thing to take place.”
YPF, based in Buenos Aires, would only struggle to pay its dividends under “extremely adverse economic and financial circumstances,” according to the report.
YPF’s American depositary receipts rose 2.2 percent to $35.99 at 9:51 a.m. in New York. The shares declined 4.3 percent yesterday after the decree was announced.
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Source: Bloomberg