S&P downgraded Argentinian power company YPF Energia Electrica to SD from CCC- on account of their debt exchange. S&P said they consider the debt exchange as a de-facto restructuring since it does not provide sufficient compensation for the extension of tenors and there’s a likelihood of a conventional default if the exchange is not completed. The rating agency added that bondholders of the 2021s were facing both conditions. S&P notes that YPF Energia had offered a combination of cash for at least 40% of the outstanding bond and two other options including an exchange for 100% of the bond and a Series VI round worth $100mn. S&P said the proposition was uncertain due to substantial country risks and volatile business conditions. They added that even without the exchange, the ability to repay the bond at maturity would have required most of their cash including accessing ‘uncommitted bilateral facilities and/or tapping the capital markets for a new bond’ leading to ‘execution risks’ in a short time frame.

YPF Energia’s USD 10% 2026s were up 0.1 to 81.44, yielding 15.2%.

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