YPF 2Q26: From Transformation to Execution

Shale economics, cash generation and liquidity improve as the focus shifts toward funding the next stage of growth

We move to Neutral on YPF (B1/B/B-) from Overweight and shift our preferred expression to the YPFDAR 9.500% 2031 notes from the 8.250% 2034s. The issuer change is a valuation call rather than a credit call. YPF’s fundamental profile strengthened materially in 2Q26, with record EBITDA, net leverage below 1.2x, cash interest coverage above 6x and a liquidity position we now assess as adequate rather than weak. Our issue is not with the direction of the credit. In fact, we think the underlying credit is stronger than the published rating category alone suggests. Neutral should therefore not be read as a cautious view on YPF’s credit trajectory. The question is whether enough issuer-level upside remains after the re-rating already delivered.

The market is increasingly pricing YPF on its forward credit profile rather than its headline ratings. The 7.000% 2033s trade at 253 bps OAS, only 13 bps wide of the EM BB corporate index at 240 bps and well inside the EM B index at 402 bps. We think that is broadly justified. YPF’s stronger leverage, liquidity, cash generation and asset quality support a market-implied credit profile above the published single-B ratings, and we would not expect the bonds to revert toward EM B spreads.

However, the speed of the repricing matters. Since our 1Q26 report, the 2033s have tightened 54 bps, the 8.250% 2034s 53 bps, the 9.500% 2031s 92 bps and the 7.000% 2047s 48 bps, compared with only 8 bps for the EM BB index. The four lines we consider most relevant also trade inside their 3-month averages and just 13 to 29 bps above their 1-year lows, against 219 to 314 bps below their 1-year highs and 139 to 193 bps inside their 3-year averages. For an issuer-level Overweight from here, we would want either broad value across the curve or a fundamental trajectory that we think the market is still materially underestimating. At current levels, most of the curve already prices a substantial part of the improvement we expect, leaving the opportunity increasingly concentrated in bond selection.