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December 21, 2014
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Due to fall in reserves, Moody's lowers Argentina debt rating

International credit rating agency Moody's has reduced the rating of Argentina's sovereign debt, moving the grade down one step from B3 to Caa1 due to the fall in the nation's international reserves and its "inconsistent" economic policy.

The new rating keeps Argentine bonds in the speculative category, although the agency now considers that the country implies "an elevated risk of not meeting debt obligations in foreign currency," it revealed in a press statement released this afternoon.

"Argentina has no access to international markets, which is why she needs her reserves in order to pay debt obligations in foreign currency," the report continued.

Moody's also highlighted "very high inflation," which it estimated "will rise much higher than 25 percent" this year. According to the agency, measures taken to halt increases could lead to a cooling of the economy.

The organisation will keep the grade on a "stable perspective" for the coming months, as it predicts that the fall in reserves will slow in the short term; although it signalled that "the government's difficulties in tackling economic imbalances" implies further risks in the future.

The start of negotiations over unpaid debt with the Paris Club, which will begin on May 26, was nevertheless held up as a "positive step" by the ratings agency.
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Tags:  Moody's  debt  Argentina  international reserves  





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