Fitch Lifts Argentina Out of Restricted Default for Second Time
Fitch Lifts Argentina Out of Restricted Default for Second Time
(Bloomberg) -- Fitch Ratings upgraded Argentina, reversing Friday’s cut to restricted default imposed after the government delayed payments on $9.1 billion of Treasury bills.
The long-term issuer default rating was raised to CC, Fitch said in a statement, while indicating that another default of some kind was highly likely.
The decision to delay payments on the dollar-denominated Treasury bills, known as Letes, until Aug. 31, 2020, placed the country in a one-day technical default, Fitch said. However, now that a new payment schedule has been imposed, the “distressed debt exchange has effectively concluded” and the country is no longer in technical default.
The rating changes are a repeat of events in August when Fitch and S&P Global downgraded Argentina to restricted default after former President Mauricio Macri delayed payments on $7 billion of Treasuries, before lifting the rating a few days later.
S&P, which cut Argentina to “selective default” again last week has yet to reverse the downgrade, while Moody’s maintains a Caa2 credit rating.
Fitch said the government could make debt payments in the near term, but that debt service will become difficult again in the second quarter due to a wall of payments of around $25 billion, out of $64 billion due for the entire year.
The government’s decision to extend payments on its short-term notes for the second time in five months illustrates the depth of problems facing the incoming government of President Alberto Fernandez. Argentina’s debt load stands at $332 billion, including loans from the International Monetary Fund. Outstanding debt with private bondholders is about $148 billion.
To contact the reporter on this story: Scott Squires in Buenos Aires at ssquires4@bloomberg.net
To contact the editors responsible for this story: Carolina Millan at cmillanronch@bloomberg.net, Philip Sanders
©2019 Bloomberg L.P.