S&P raises Argentina

S&P said it raised its foreign currency sovereign credit ratings on Argentina to CC from SD. The outlook on the long-term sovereign credit ratings is negative. “We had lowered the ratings to SD (selective default) on Dec. 20 following the unilateral extension of U.S. dollar-denominated short-term paper (Letes) held by private-sector market participants on Dec. 19, 2019; our criteria do not distinguish between short- or long-term ratings when there is a default,” the agency said in a press release.

Argentina cured its short-term defaults by holding two auctions for peso-denominated debt and curing the short-term default.

“Both the CC ratings and negative outlook incorporate that we view debt repayment as highly vulnerable. The new administration is expected to advance with a restructuring plan in the coming months, the terms of which are unknown, affecting its long-term debt with the private sector,” said S&P.

The next debt restructuring would be in line with the agency’s CCC rating criteria and distressed exchange criteria; it could entail an extension of maturities, which will not be compensated by the issuer, or a reduction in the face value of debt. Alternatively, there are risks associated with failure to advance with a timely debt renegotiation, raising the possibility of missing principal or interest payments, the agency said.

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