S&P raises Argentina's credit rating, but warns about the 40% inflation

Monday, May 9th 2016 - 09:17 UTC

Full article 14 comments

The rating boost comes after Argentina ended a decade-long legal battle with creditors led by billionaire Paul Singer

Macri, who took office in December, has allowed the currency to float freely and removed most export tariffs as he seeks to stem surging inflation.

“The stable outlook on the rating balances our expectation for improvement in economic policies and gradual stabilization” S&P analyst Delfina Cavanagh said

Argentina’s credit rating was raised to B- from selective default by S&P Global Ratings, which cited the country’s payment last Thursday of $2.7 billion of past-due interest on bonds in default since July 2014.

The outlook for Argentina's rating is stable, S&PGR said in a statement on Friday. The ranking is five levels below investment grade and in line with that of Greece, Ukraine and Mozambique. S&PGR had previously assigned a B- rating to $16.5 billion of bonds Argentina sold last month.

The rating boost also comes after Argentina ended a decade-long legal battle with creditors led by billionaire Paul Singer, part of President Mauricio Macri’s push to undo the policies of his predecessor Cristina Fernandez de Kirchner.

Macri, who took office in December, has allowed the currency to float freely and removed most export tariffs as he seeks to stem surging inflation.

“The stable outlook on the rating balances our expectation for improvement in economic policies and gradual stabilization of the economy with the political challenges facing the new Administration,” S&P analysts led by Delfina Cavanagh said in the statement.

However S&P also pointed out that inflation remains too high, probably above 40% annualized and ”we expect GDP to contract this year (partly because of the fiscal and monetary contraction) exposing subjacent economic and political challenges.

Categories: Economy, Politics, Brazil.

Tags: Argentina, Argentina inflation, Delfina Cavanagh S&P, Mauricio Macri President, Paul Singer, Standard & Poor's.

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ChrisR
“The ranking is five levels below investment grade and in line with that of Greece, Ukraine and Mozambique.”

And that's an improvement!

Now do we believe what S&P have said? Not a good track record in the past so hopefully they will be wrong as usual and things will be better than their predictions.

I do hope so.
May 09th, 2016 - 10:43 am 0
Merry Englander
Although still a very poor rating it is indication of the step in the right direct that the country has taken. I expect there will be future upgrades to come. Unlike the other countries with similar S&P status, Argentina has great export potential that has been shackled by recent policy.
May 09th, 2016 - 12:38 pm 0
Marti Llazo
Great potential shackled by persistent innate economic incompetence and the continuing rule of Peronist populism through its control of the legislature. Wage structures and labour laws ensure noncompetitive workforce and neo-Luddite practices that discourage foreign investment. GM is producing cars in India for the Argentine market.... what does that tell you about competitiveness in semi-skilled labour ? Crumbling infrastructure. Rampant corruption. Importing energy from Chile - the classic unambiguous measure of long-term incompetence. Economy in recession, inflation off the graph and worsening, the expressed desire of congress members that the present government fail. Persistent junk still recognised as junk. The countdown until the next default is running.
May 09th, 2016 - 02:02 pm 0

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