Argentina’s credit rating was downgraded by Fitch Ratings to the lowest level above default, as the government plans to force state institutions to dump their dollar bond holdings.
The South American country’s rating was downgraded two notches to C from CCC- by Fitch, according to a statement sent on Friday.
The debt swap, announced in an official government decree on Thursday, would imply unilateral exchanges and forced currency conversions that qualify as default according to Fitch’s criteria.
Bond exchange: because ANSES says it will benefit retirees
“The ‘C’ rating reflects Fitch’s opinion that a default is imminent”, Fitch analysts led by Todd Martinez wrote. The rating agency said Argentina’s score would be reduced to restrictive default when the swap occurs.
bond redemption
The state banks and the public pension fund Anses will exchange 100% of its foreign bond holdings under New York law for peso-denominated debt. Peso bonds maturing in 2036 will pay the higher yield of a dollar-linked or inflation-linked option.
Moody’s Investors Service gave the country a rating of Caa3, the third lowest score with a stable outlook. S&P Global Ratings rated the country two notches higher with a negative outlook.
LM / MCP
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