Fitch Top 10 Most-Actively Traded LatAm Corps: Pacific Rubiales Scenario Analysis

CHICAGO--()--Fitch Ratings believes Pacific Rubiales Energy Corp.'s (Pacific Rubiales) ratings may see negative actions in the short term as depressed oil prices are forcing the company to reduce capex. This in turn could lead to slowing reserves and production replacement, according to the latest report in Fitch's 10 report series Top 10 Most-Actively Traded LatAm Corporates.

One report in the series will be released each day through Feb. 13th per the schedule found at the bottom of this release.

'The company's credit quality could be pressured should oil prices remain at current levels over the short to medium term,' said Lucas Aristizabal, a Senior Director at Fitch. 'At sustained $50/barrel (bbl) prices in 2015, the company could violate incurrence covenants on its international bonds, which could lead to negative rating actions.'

The company's international bond covenants require maintenance of total debt-to-EBITDA under 3.5x and restrict debt issuance if the covenant is not met. Negative rating actions could be triggered if Fitch deems the covenant breach to be imminent. Fitch is closely monitoring the company's financial performance under current depressed market conditions.

Pacific Rubiales' negative ratings triggers have historically included a sustained adjusted leverage above 2x, reserve replacement ratio declines, and/or the deterioration of reserve life. The ratings will also suffer if the company reinstates its dividend or equity buy-back programs during the current low oil price environment.

Fitch's Top 10 Most-Actively Traded LatAm Corporates series will be released one report per day as follows:

--Feb. 2nd: Oi Scenario Analysis - Asset Sales and Industry Consolidation are Key to Credit Profile Recovery

--Feb. 3rd: Cemex Scenario Analysis - Road to Investment Grade Runs through the U.S.

--Feb. 4th: Ecopetrol Price and FX Sensitivity Analysis - Rating Linkage with Sovereign Could Weaken

--Feb. 5th: America Movil Scenario Analysis - No Separation Anxiety

--Feb. 6th: Vale Scenario Analysis - Ratings Rock Solid Despite Industry Softness

--Feb. 9th: Pacific Rubiales Scenario Analysis - Preserving Liquidity Depletes Reserves

--Feb. 10th: PDVSA - Something's Gotta Give

--Feb. 11th: Cencosud Scenario Analysis - What Factors Could Stabililze the Company's 'BBB-' Rating

--Feb. 12th: Construtora Norberto Odebrecht Scenario Analysis - Could CNO Lose its Investment Grade Rating due to Lava Jato Scandal?

--Feb. 13th: Petrobras - A Political Labyrinth

For more information, a special report titled 'Pacific Rubiales - Scenario Analysis' is available on the Fitch Ratings web site at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Pacific Rubiales - Scenario Analysis (Preserving Liquidity Depletes Reserves)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=861365

Oi, S.A. Scenario Analysis

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=861188

CEMEX, S.A.B. de C.V. (Investment-Grade Path Runs Through the U.S.)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=861420

Ecopetrol Price and FX Sensitivity Analysis (Rating Linkage with Sovereign Could Weaken)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=861405

America Movil S.A.B. de C.V. - Scenario Analysis (No Separation Anxiety)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=860791

Vale S.A. - Scenario Analysis (Ratings Rock Solid Despite Industry Softness)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=861440

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Contacts

Fitch Ratings
Primary Analyst
Lucas Aristizabal
Senior Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Xavier Olave
Associate Director
+1-212-612-7895
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Lucas Aristizabal
Senior Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Xavier Olave
Associate Director
+1-212-612-7895
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com