TEXT-S&P says Repsol SA ratings unchanged after Spain downgrade


(The following statement was released by the rating agency)

Oct 11 - Standard & Poor's Ratings Services said today that its ratings andoutlook on Spain-based integrated oil and gas company Repsol S.A.(BBB-/Stable/A-3) are unchanged by the downgrade of the long-term sovereigncredit rating on the Kingdom of Spain to 'BBB-' from 'BBB+' with a negativeoutlook. Repsol's exposure to the weak Spanisheconomy nevertheless remains a risk factor for the ratings, in our view. Weunderstand that about 45% of capital employed by Repsol (excluding its GasNatural and YPF operations) relates to the downstream business in Spain. Wetherefore classify Repsol's sovereign risk exposure as "moderate" under ourcriteria (for further details see "Nonsovereign Ratings That Exceed EMUSovereign Ratings: Methodology And Assumptions," published June 14, 2011, onRatingsDirect on the Global Credit Portal.)

We do not consider the ratings on Repsol to be affected at this stage by themacroeconomic situation in Spain, which was a factor in our recent downgradeof the sovereign. This is supported by our view that Spain's membership of theEuropean Economic and Monetary Union (EMU), and the euro's global status as areserve currency for transactions within the EMU, leads to only modest foreignexchange rate risk vis-a-vis other currencies. Furthermore, we believeRepsol's profitable upstream divisions provide significant internationaldiversification and U.S. dollar revenues. In a theoretical scenario underwhich we lowered the sovereign rating below that on Repsol, our criteria wouldallow the rating on a company to exceed the sovereign rating by up to twonotches as long as we still considered Repsol's exposure to sovereign risk as"moderate".

(Caryn Trokie, New York Ratings Unit)

((Caryn.Trokie@thomsonreuters.com; 646-223-6318; Reuters Messaging:rm://caryn.trokie.reuters.com@reuters.net))