Sunday , June 13 2021

Standard & Poor's, Argentina Debt Reduction



The ratings agency, Standard & Poor's (S & P) global credit rating, said on Monday that the long-term foreign and local currency ratings of Argentina are from 'B +' to & # 39; B, "B" rating. Fitch Ratings, a competitor last week, changed the outlook for long – term debt in Argentina from stable to negative.

Due to the recession, Pitch lowered its Argentina debt to minus.

"We also removed the long-term rating from the CreditWatch list and placed the credit rating results negative on August 31, 2018. The prospects for the long-term rating are stable." In the & quot; raAA & quot; We have the sovereign rights to "raAA -" We are transitioning from BB- & # 39; to & # 39; B + & # 39; Lower rating (T & C) rating.

The explanation used to make this decision emphasizes the political risks of debt from elections and the deterioration of debt sustainability indicators due to exchange rates. Half of asceticism restores market confidence. "The decline in the long-term rating reflects the dynamics of inflation, with the erosion of the debt structure of challenging Argentina, the trajectory of economic growth and the frustration of implementing a tough economic adjustment program," he said.

"Unexpected negative political events or the irregular execution of the government's economic tightening program can give investors more confidence, undermine the government's approach to market financing, and potentially push the currency back down the ratings for the next 12 months This will affect the dynamics of inflation, "he warned.

"If unexpected negative political events or irregular execution of the government's economic tightening program give investors more confidence, they can lower the rating," the S & P warned.

"Likewise, the perception that sovereign commitments to the economic adjustment program may be shaken after the general election in 2019 may create a similar adverse market dynamics and lead to high interest rates for long periods of time. Anyway, if the king's financial condition deteriorates and the debt maturity is refinanced "The ratings can be lowered if you approach the liquidity that you have," the appraiser added.

Anyway, a new stable outlook on the rating reflects the expectation that the S & P will enforce the government "difficult measures, financial, monetary and other measures to stabilize the economy within 18 months and gradually include deterioration of the profile." Financial and sovereign debt Level, inflationary dynamics and investor confidence recovery. "

For rating agencies, after the national elections in October 2019, major economic policies have provided the basis for a recovery with lower expectations for government funding, lower inflation and interest rates and key economic policies. Economic and external vulnerabilities. "

However, the recent impact of the irregular implementation of the government's economic strategy "worsened our forecasts of the financial characteristics, inflation and economic performance of sovereignty over the next two years. In 2019, before it slowly recovers, according to the report.

About S & P signal inflation, which is expected to reach 44% in 2018, it will "gradually decline to 25% in 2019," he said.

"The sharp fall in the Argentine peso against the US dollar this year has contributed to the increase in government debt burden (because most of the government bonds are denominated in foreign currencies). The government's net debt is more than 80 percent of GDP at 50 percent this year, More than 70% of central government debt is denominated in foreign currencies. However, 42% said they are in the hands of public sector creditors, which mitigates the risk of refinancing. "

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