Argentina Regains Risk Rating After Demotion

RIO DE JANEIRO, BRAZIL – Standard & Poor’s (S&P) announced on Friday, August 30th, that Argentina will no longer have a SD (Selective Default) rating, which was awarded on Thursday afternoon, August 29th, after the government unilaterally announced that it will postpone the payment of debts to the International Monetary Fund (IMF).

With the government’s announcement of “new terms and conditions” for the payment of its commitments, S&P reported that it would again raise the country’s rating to the CCC category for long-term debt and the C category for short-term debt.

A country receives an SD rating when the rating agency determines that there is a violation of one or more of its long-term or short-term financial obligations.

Argentina has been downgraded for failing to meet a number of payments, although it has maintained others. Last Wednesday night, August 28th, Argentina’s Finance Minister, Hernán Lacunza, announced that he would begin renegotiating the deadlines for paying the country’s debt to the International Monetary Fund (IMF), “to protect short, medium and long term exchange rate stability.”

Last year, Argentina received a US$57 billion (R$228 billion) loan from the IMF. The first repayment installment was due to be made in 2021.

“Argentina doesn’t have a solvency problem, but a medium-term liquidity problem,” Lacunza said, pointing out that the country is committed to payments.

In addition to renegotiating the debt with the IMF, the government further announced that it would reschedule payments of dollar-denominated bonds to institutional investors, who hold ten percent of these securities in Argentina.

Argentine President Mauricio Macri assured that he would handle the debt issue and asked the opposition for support in moving forward with the deadlines.

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