MercoPress. South Atlantic News Agency

Moody's bets are on Macri: upgrades Argentina's debt rating to 'stable' from 'negative'

The outlook change is based on shifts in the political climate, reducing the risk of investors suffering greater than expected losses with a new government

Following the first round of presidential elections in Argentina on Oct. 25, which the ruling party won by a lower-than-expected margin, credit rating agency Moody's Investors Service upgraded on Monday the country's debt rating to “stable” from “negative.”

 “The outlook change is based on Moody's view that shifts in the political climate are reducing the risk of investors suffering greater than expected losses once a new government assumes power on 10 December 2015,” the agency said in a statement.

Moody's maintained Argentina's rating at Caa1, and that of foreign legislation and restructured local legislation foreign currency obligations at (P)Caa2.

According to Moody's, the election results suggest “popular support for policy change post-election is greater than previously thought,” a factor, which would reduce the “risk of greater than expected losses to investors in the next 12 to 18 months.”

The agency believes after the first round of elections, “the likelihood of a break from the past is rising regardless of who ultimately wins the presidency.”

And this, it says, reduces the probabilities of adverse scenarios reflected in the previous negative outlook and looks forward to “a more consistent policy framework” that “would lessen the possibility of Argentina running into difficulties meeting its debt obligations in 2016 and 2017.”

Daniel Scioli, the ruling party candidate had won 36.8% of the vote in the country's first round of elections, merely 2.5 percentage points ahead of the opposition's conservative candidate, Mauricio Macri, who got 34.3%.

The margin was much lower than forecast by pre-election opinion polls, which had predicted Scioli was close to winning the presidency in the first round itself.

Given that no candidate polled over 45% of the vote, or 40%t with a ten percent lead over the runner-up, the two with the maximum votes - Scioli and Macri - will face off in a run-off election, next 22 November, a first for Argentina.