Spain's Repsol has agreed to sell 5% of its stake to Temasek, a Singaporean government fund, in a move for financial stability after it closed a deal for the sale of its liquefied natural gas (LNG) assets to Royal Dutch Shell last month.

Repsol said in a statement that Temasek, which has been increasing investments in the energy sector, lifted its holding to 6.3% as it acquired the entire portfolio of treasury stock in the Spanish oil group in a 1.04 billion euro deal.

The deal is expected to lift the credit rating of Repsol which has been scrutinized when its majority YPF stake was seized by Argentina last year, leading to concerns over growth and funding.

Repsol is seen to have strong production growth and recovered from the YPF expropriation as it beat forecasts for the fourth quarter earnings last week.

Last month, Repsol agreed to sell its LNG assets to Shell for $4.4 billion in cash in the hope for cutting debts into halve to 2.2 billion euros.

Temasek, the ninth-largest sovereign investor in the world, did not respond to the deal.