UNITED STATES, WASHINGTON (VOP TODAY NEWS) — Credit rating agencies Fitch and Standard & Poor’s downgraded Argentina’s sovereign debt on Friday after President Mauricio Macri’s massive electoral setback and plunged markets and currency into turmoil.
The downgrade of Argentina from B to CCC by Fitch and B to B negative by Standard & Poor’s reflects concern over Macri’s economic reforms.
“Financing conditions have fallen sharply and the expected deterioration in the macroeconomic environment increases the likelihood of defaulting on sovereign debt or in some way restructuring that debt,” Fitch said in a statement.
Standard & Poor’s, for its part, said the “declared turmoil in the financial market” and the “devaluation of the Argentine peso” that followed Sunday’s vote “significantly weakened the already fragile financial picture” of the sovereign debt of the South American country.
After his landslide defeat in the primaries, a test before the October 27 ballot, President Macri on Wednesday announced a series of measures to “boost” the purchasing power of the middle and popular classes and try to compensate for delays in his reforms.
These measures include raising the minimum wage, cutting taxes and freezing fuel prices for three months.
At the same time, Macri and Alberto Fernandez, his main rival in the October presidential election, called for calm and promised cooperation.
The financial storm has calmed a bit, but Fitch believes that “the risk in financing public debt and the probability of default has risen.”
Despite significant financial assistance from the IMF and other loans this year, the credit rating agency believes the government could face problems refinancing debt with short-term bonds worth $ 24 billion.
Half of the bonds are priced in US dollars, with three-quarters of them due at the end of the year.
The Argentine government has abandoned raising short-term funds because of the volatility in the country, said Fitch, who saw it as a “bad omen.”
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