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S&P maintains Argentina’s rating stable at “B”, supported by strong surplus

Tuesday, September 13th 2011 - 02:22 UTC
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S&P says uncertainty over economic policies contributes to double-digit inflation S&P says uncertainty over economic policies contributes to double-digit inflation

Standard & Poor’s reported that Argentina’s rating remains as “B” (global scale, local and foreign currency) and “raAA” (national scale for Argentina).

It also announced that the trend of the rating is stable, and maintained the rating of transference and convertibility of the country in “B.”

“The ratings of Argentina show the limited access of the government to finance sources, the uncertainty over its economic policies contribute to double digit inflation and to the rigidity of the public expenditure,” S&P stated.

It also added that “the ratings are supported by the surplus, a strong availability for international reserves.”

Standard and Poor’s indicated that the country is successfully reducing its debt levels with a government general net debt level that is expected to reach 38% of GDP by the end of 2011.

“This recovery is a result of the low fiscal deficits and the impact of a high inflation in the GDP”, said S&P.

A year ago S&P raised Argentina’s long-term foreign currency credit rating by one notch from B- to B. The upgrade followed a similar action by Fitch Ratings.

At the time S&P said that rating maintains a stable outlook but is still mired deep within speculative territory, citing nagging political tensions in the country a year before the next presidential election.


Categories: Economy, Argentina.

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  • GeoffWard2

    The S&P ratings allocate B rating to Argentina.

    Nations usually are accorded AAA, AA(AA+, AA, AA-), A(A+, A, A-), BBB.

    BB and below are ‘Non-Investment Grade’, sometimes called ‘junk grade’.

    “B: Vulnerable but currently has the capacity to meet its financial commitments.
    Adverse business, financial, or economic conditions will likely impair capacity or willingness to meet its financial commitments.” (Wiki)

    B grade for Argentina is bad, but it could be worse –

    “C grades are available for the highly vulnerable and likely defaulters.”

    But there is a certain case to be made that Argentina should be graded even lower:
    • R: “Under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision, the regulators may have the power to favor one class of obligations over others or pay some obligations and not others.”

    • SD:” has selectively defaulted on some obligations”

    • D: “has defaulted on obligations and S&P believes that it will generally default on most or all obligations” (ibid.)

    Because of Argentina’s recent default, the highest rating that S&P SHOULD allocate is a resounding SD.

    Sep 13th, 2011 - 10:07 pm 0
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