“Argentina conducted a peso debt swap last week that we classified as a distressed swap given the sovereign’s macroeconomic vulnerabilities and its very limited ability to extend maturities and place debt in the local market.” , explained the rating agency S&P. to justify his bad grade last week, which was finally corrected yesterday. “How the new instruments to be exchanged were delivered to the bondholderswe consider the swap to be remedied on unfavorable (distressed) terms, equating to default according to our criteria,” the rating agency said.
S&P Global Ratings has agreed to maintain Argentina’s sovereign credit rating at “CCC+” in foreign currency with a negative long-term outlook, At the same time, it upgraded its local currency rating to “CCC-“.
Among the reasons for this decision, the agency has welcomed the exchange of sovereign debt for Argentine pesoscarried out last week by the government of the country, e classified as “difficult”given its debt’s marked macroeconomic vulnerabilities and limited ability to extend maturity.
“Taking into account that the new instruments to be exchanged have been delivered to the bondholders, We believe the distressed swap, equivalent to a default by our standards, is resolved.”explained by S&P.
In turn, the negative outlook of the rating is the result of the risks posed by the “pronounced” economic imbalances. Y political uncertaintywith an eye to the elections to be held in the country at the end of 2023.
In this sense, S&P negatively underlined the disagreement within the Argentine government, which prevents changes to be made “timely” in economic policy.
Argentina’s credit rating could be downgraded if a “negative” policy develops. jeopardizing already limited access to finance, as well as a delay in the implementation of International Monetary Fund (IMF) loans.
Conversely, the country’s rating could be upgraded if financial difficulties in the local market ease or if there is a “more marked” recovery of the economy, with “solid” fiscal results.
NS
Source: Clarin
