May 24, 2013
S&P downgrades Argentina's rating on 'vulture funds' ruling
Standard & Poor's Ratings Services reported it has downgraded Argentina's sovereign credit rating from "B" to "B-," following the US Second Circuit Court of Appeals affirmed the ruling over "vulture funds."
The ratings' agency stated that "the outlook is negative, reflecting the risks we believe Argentina will likely continue to face to withstand pressures on its external liquidity."
"This follows the ruling by the Second Circuit Court of Appeals of the US affirming the judgment of the New York District Court granting summary judgment to plaintiffs on their claims for breach of an equal treatment provision in the terms of the bonds," it stated.
It also details that "although we don't expect the Appeal Court rule in New York to have an immediate impact on debt service because the procedure for implementing the equal treatment provision has not yet been defined, it will make it more difficult for Argentina to normalize its relationship with private, bilateral, and multilateral lenders."
Standard & Poor's also describes in its report a series of recent events that had led to Argentina's downgrade, such as the Libertad frigate conflict, in which the country's navy ship was blocked in Ghana by debt holders.
Besides, it includes the "payment in local currency of a provincial bond denominated in US dollars" as another reason for this action.