Twas two nights before Christmas and all through the markets, not a creature was stirring well, that's at least what Argentina's YPF might have you believe. As quiet as a yuletide mouse, the oil giant crept in with a slick export receivables deal Dec. 23 that some say hit around US$357 million.

Apart from short, vague releases put out by ratings agencies Standard & Poor's and Moody's Investor Service, hardly a peep came out of the markets about Oil International Ltd., an SPV that issued 2009s worth US$200 million at 3.98%. Neither agency mentioned the originator.

That paper which is heard to be the senior tranche of a US$357 million deal came wrapped, courtesy of Ambac, and thereby garnered a triple-A rating.

Morgan Stanley structured the Cayman Island-based trust, with Mayer, Brown, Rowe, and Maw as legal counsel, according to sources. The bond was a 144A with no registration rights. Details surrounding a reported subordinated piece are even murkier, but is said to total around US$157 million and hold investment grade status.

Calls to a YPF official went unanswered.

One of the deal's curiosities was the involvement of Ambac, which has been eschewing Argentine risk over the past year. The clincher in the monoline insurer's decision could have been a performance obligation binding YPF's Spanish parent Repsol to the SPV. Previous YPF structured deals carried options for Repsol to pump oil generated elsewhere into the deal if the Argentine company ran into trouble. "This time the language was much stronger, it really transfers risk to Repsol," said a source away from the transaction. Moody's and S&P rate the Spanish company Baa2/BBB, respectively. YPF's junk ratings are B1/B+.

Proceeds from Oil International are apparently going to refinance a seven-year loan from Spanish Bank BBVA, extended around the time Argentina collapsed into default after months of backbreaking financial stress.

The headline risk that dogs every Argentine deal no matter how remote from the sovereign clearly motivated this intense secrecy, but sources on and away from the deal concur that in the case of YPF, the risk is muted, though certainly not absent.

The company has a handful of non-structured bonds and two structured deals in the international markets. "Frankly, if you consider what's happened with other Argentine paper, they've performed amazing," said a New York-based corporate analyst. Many of the fairly liquid naked bonds had swung as low as the 60s when investors fled all Argentine paper. Now they all hover in the high 80s to high 90s. None have even come close to default.

The same holds true for the underlying risk of the structured deals. Two export notes, 7.5% SEN II and 7% SEN III, matured in October and paid out in full. Apart from the latest transaction, outstanding securitizations fall due on Nov. 21, 2003 (6.467% Oil Trading) and June 30, 2008 (6.239% Oil Enterprises). Capital Markets Assurance Corp. (CapMAC) wrapped the former, MBIA the latter. MBIA now guarantees both deals following the acquisition of its rival six years ago.

The pair have been amortizing smoothly. Oil Trading has US$34 million outstanding, while Oil Enterprises has US$86 million.

Yet direct YPF risk is not entirely dismissible. For one, the company has faced jacked-up taxes as the government struggles to stay afloat. "It's certainly a more stressful environment in Argentina to operate an oil company," said a source involved in a YPF transaction.

In addition, there's the menacing bugbear of all Argentine exporters: forced repatriation of profits. Oil has so far stood among the commodities exempt from the government's heavy hand, but that special status may not hold. A presidential election in Argentina is set for April and a new administration may not take as kindly to the charmed sector.

(Matthieu Wirz from IFR LatAm contributed to this article.)

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