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S&P downgraded Argentina’s peso debt note to selective default

S&P downgraded Argentina’s peso debt note to selective default

“Unlike the two previous debt swaps, we believe that this transaction“takes place” in unfavorable conditions due to conventional probability of default (absence of creditor participation) given the pronounced macroeconomic vulnerabilities of the sovereign and its very limited ability to extend maturity,” the agency said in a statement.

“According to our criteria, unfavorable redemption equals a default“, the agency states, to justify downgrading the local currency sovereign credit rating to SD.

Also the negative outlook on the long-term foreign currency rating “reflects the risks that surround the economic imbalances pronounced and the political uncertaintiess before and after the elections” of 2023, he adds.

Another of the elements that contributed to this rating was Argentina’s difficulty in accessing global capital markets and, as they pointed out, the disagreement within the government coalition and the internal struggles among the opposition that account for the “limited capacity” to implement changes in economic policy.

Argentina faces a close of the year that will be located at the inflation around 95.5% year-on-year for last December, according to the Survey of Market Expectations (REM) carried out by the Central Bank. For next year, those surveyed expect inflation to accelerate and reach 98.4%.

Another factor that contributes to uncertainty is the drought which affected not only the sowing of wheat, corn and soybeans, but also hit other sectors such as livestock and dairy.

Source: Ambito

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