Monday April 18 2016

News Source: Global Exchanges

Focus: Credit Rating

Type: General




On 15th April 2016, Moody`s Investors Service upgraded Argentina`s issuer rating to B3 from Caa1. The rating on Argentina`s foreign legislation and restructured local legislation foreign currency obligations is also upgraded to (P) B3 from (P) Caa2. The senior unsecured shelf rating was upgraded to (P) B3 from (P) Caa1. Argentina`s short-term rating was affirmed at Not-Prime (NP).

The key drivers for the upgrade are:

  • Expectation that Argentina will settle holdout creditor claims which will result in a lifting of court injunctions and clear the way for Argentina to access international capital markets. The likelihood that Argentina will make payments to restructured bondholders increased significantly following the 13 April US circuit court ruling in favour of Argentina.
  • The economic policy improvements since the Macri administration took office last December. The new government lifted capital controls and allowed the peso to float more freely, reduced energy and transportation subsidies and has begun to address longstanding macroeconomic imbalances.

In addition, Argentina`s ratings are now aligned at B3 level, given the anticipated resolution of prior debt defaults and our view that both types of obligations will have the same default probability going forward.

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