Temasek raises stake in Spain's Repsol to 6.3pc

MADRID: Spanish oil group Repsol has sold a five per cent stake to Singapore's government fund, Temasek, in a further step towards financial stability after the sale last week of gas assets to Royal Dutch Shell.

Temasek, which has been boosting investments in the energy sector, bought Repsol's entire portfolio of treasury stock for ?1.04 billion (RM4.19 billion), lifting its holding to 6.3 per cent, Repsol said yesterday.

Repsol made a ?148 million loss on the transaction after selling the stock at a discount.

But the deal should help Repsol's credit rating, under scrutiny since Argentina expropriated its majority YPF stake last year, triggering concerns over funding and growth.

"This deal draws a line under the credit rating issue for Repsol and gives them a long-term investor of the size of Temasek," said Brendan Warn, an analyst at Jefferies.

Temasek, the world's ninth-biggest sovereign investor, had no immediate comment on the deal.

Repsol, which last week beat earnings forecasts for the fourth quarter, helped by strong production growth, has been in recovery mode since the seizure of cash contributor YPF.

It had to focus on asset sales to chip away at its big debt burden as it tried to hang onto its investment-grade rating.

Repsol last month sold liquefied natural gas assets to Royal Dutch Shell for US$4.4 billion RM13.67 billion) and said its net debt would halve to ?2.2 billion once the deal is completed.

On Friday, ratings agency Moody's changed its outlook for Repsol to "stable" from "negative", citing progress in cutting its debt, while Fitch did the same at the end of January. Reuters