MercoPress. South Atlantic News Agency
Moody's downgrades Argentina's because of inconsistent economic policy
The credit risk agency also highlighted the 'very high inflation' which it estimates will rise above 25% this year International credit rating agency Moody's has reduced the rating of Argentina's sovereign debt, moving the grade down one step from B3 to Caa1 due to the fall in the nation's international reserves and its “inconsistent” economic policy.
The new rating keeps Argentine bonds in the speculative category, although the agency now considers that the country implies “an elevated risk of not meeting debt obligations in foreign currency,” it revealed in a press statement released Monday afternoon.
“Argentina has no access to international markets, which is why she needs her reserves in order to pay debt obligations in foreign currency,” the report continued.
Moody's also highlighted “very high inflation,” which it estimated “will rise much higher than 25%” this year. According to the agency, measures taken to halt increases could lead to a cooling of the economy.
The organization will keep the grade on a “stable perspective” for the coming months, as it predicts that the fall in reserves will slow in the short term; although it signaled that “the government's difficulties in tackling economic imbalances” implies further risks in the future.
The start of negotiations over unpaid debt with the Paris Club, which will begin on May 26, was nevertheless held up as a “positive step” by the ratings agency.
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Read all commentsJunk bond status only a stones throw away for Argentina.
Mar 18th, 2014 - 07:38 am 0But of course there is nothing wrong with their economy - it is just the world out to get them.
I strongly dispute this latest rating by Moody's.
Mar 18th, 2014 - 09:50 am 0We have a very consistent down trend going on for the last 3 years!
@1 LEPRecon, strictly speaking Moody's consider anything rated Ba1 or lower as “speculative grade” (aka junk bonds), so Uruguay, Turkey, the Philippines and Ireland are just above junk status.
Mar 18th, 2014 - 10:29 am 0Argentina has just dropped from extremely-risky-better-not-to to may-as-well-burn-the-bond-paperwork-for-warmth.
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