Bolivian President Evo Morales has signed a decree to nationalize the hydrocarbons sector, requiring that foreign-owned energy companies turn over their natural gas fields to the state immediately and sign new operating contracts within 180 days, according to media reports. "While the measures highlight the degree of uncertainty in the country and further constrain Bolivia's ability to attract investments, the low sovereign rating assigned to Bolivia already incorporates these factors," says Standard & Poor's sovereign credit analyst Sebastian Briozzo. "There is also no effect on the sovereign ratings on the Federative Republic of Brazil. Brazil imports 50% of its natural gas from Bolivia, but natural gas only accounts for 9% of energy needs," he adds. S&P expects no significant operational changes in the hydrocarbon sector in Bolivia, while the specifics of the recent decree are sorted out among the players, says S&P analyst Pablo Lutereau. "Long-term developments will be shaped by negotiations with current producers as well as by the final role to be played by state-owned company YPFB. Natural gas exports to Brazil and Argentina should not be affected during the next few months, but the nationalization process could well lead to an increase in prices." Lutereau rates Repsol-YPF, which is active in Bolivia, BBB+ and on Watch Negative, and does not expect the rating to be immediately affected due to the marginal importance of Bolivian operations on Repsol-YPF's business and financial profiles. Deutsche Bank analyst Dave Thomas says the impact from expropriation of Bolivian assets is "relatively immaterial to Repsol. However (Latin American) risks are increasing, and it will take years for its diversification strategy to bear value-accretive fruit. "We see the shares as rangebound, with little chance of good news to drive a re-rating, but with support provided at lower levels by equity markets looking at potential corporate activity." He adds that Bolivian nationalization would see Repsol-YPF's reserve life fall from 7.8 to 6.9 years, so it will need to add reserves through exploration and acquisitions. "The problem for Repsol is how to make value-accretive deals at current prices."