* Temasek lifts Repsol stake by 5 percent for $1.4 billion
* Discounted deal means 148 mln euro cash loss for Repsol
* Transaction seen as big positive for Repsol credit ratings
* Repsol shares up 2.2 pct at 1030 GMT
By Sarah White and Tracy Rucinski
MADRID, March 4 Spanish oil group Repsol
has sold a 5 percent stake to Singapore's government
fund, Temasek, in a further step towards financial stability
after the sale last week of gas assets to Shell.
Temasek, which has been boosting investments in the
energy sector, bought Repsol's entire portfolio of treasury
stock for 1.04 billion euros ($1.35 billion), lifting its
holding to 6.3 percent, Repsol said on Monday.
Repsol made a 148 million euro loss on the transaction,
after selling the stock at a discount.
But the deal should help Repsol's credit rating, under
scrutiny since Argentina expropriated its majority YPF
stake last year, triggering concerns over funding and growth.
"This deal draws a line under the credit rating issue for
Repsol and gives them a long-term investor of the size of
Temasek," Brendan Warn, analyst at Jefferies.
Temasek, the world's ninth-biggest sovereign investor, had
no immediate comment on the deal.
Repsol, which last week beat earnings forecasts for the
fourth quarter, helped by strong production growth, has been in
recovery mode since the seizure of cash contributor YPF.
It had to focus on asset sales to chip away at its big debt
burden as it tried to hang onto its investment-grade rating.
Repsol last month sold liquefied natural gas assets to Royal
Dutch Shell for $4.4 billion cash, and said its net
debt would halve to 2.2 billion euros once the deal is
On Friday, ratings agency Moody's changed its outlook for
Repsol to "stable" from "negative", citing progress in cutting
its debt, while Fitch did the same at the end of January.
The Temasek deal helps Repsol rid itself of the last chunk
of treasury stock it took on in a roundabout way from former
shareholder Sacyr Vallehermoso, a loss-making Spanish
Bank creditors of indebted Sacyr, which ended up with 10
percent of Repsol as part of a refinancing deal for the builder,
sold that stake back to the oil major at the end of 2011.
Repsol had already shed 5 percent of the treasury stock in
early 2012, selling the shares to market investors at a profit.
In the latest deal, Temasek paid 16.01 euros a share, or a
1.7 percent discount to Friday's close. Shares in Repsol were up
2.2 percent at around 1030 GMT.
Warn at Jefferies said he thought the transaction implied a
fair valuation, even though it will hit Repsol's cash reserves.
Temasek, which has over 115 billion euros of assets
according to Repsol's statement, already has some big stakes in
energy groups, including 5 percent of U.S. oil company
Chesapeake and 40 percent of U.S. oil field services
group FTS International, its website showed.
Energy investments only made up 6 percent of Temasek's
portfolio in its last financial year, ending in March, compared
with 31 percent of investments in the financial industry,
including big stakes in DBS Group Holdings and Standard
But Temasek's energy investments made up 3 percent of its
portfolio the year before, and it recently hired a senior
executive to look at opportunities in the liquefied natural gas