MercoPress. South Atlantic News Agency

Moody’s lowers Argentina’s foreign currency bonds’ ceiling to b3 from b2

Central bank is not obliged to provide hard currency for domestic bonds

Moody's lowered on Thursday Argentina's foreign-currency bond ceiling to b3 from b2 in line with bonds in local currency on growing concerns of market access for the private sector and local governments.

Although the agency acknowledges that the Argentine Central bank currently allows the purchase of foreign currency to service bonds issued according to international Law and payable overseas, the growing restrictions in access to foreign currency for servicing domestic debt makes availability of funds for honouring debt overseas even more uncertain”, reads the brief announcement.

For Moody’s the bonds ratings reflect the transfer and convertibility risks for an issuer of local debt in foreign currency which depends on a reliable access to foreign currency through overseas operations.

Moody’s underlines that current regulations do not contemplate the Argentine central bank providing foreign currency to pay debt issued in the country in foreign currency, according to Argentine Law. Thus and according to domestic law, debt documents in foreign currency are exposed to a major risk of default and are generally rated below the maximum limit for bonds in foreign currency”.