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Moody's cuts ratings on Argentine financial firms after sovereign downgrade

Moody's on April 7 downgraded the global scale long-term foreign currency deposit and debt ratings on nearly two dozen Argentine banks and finance companies, following a similar action at the sovereign level.

The rating agency said that 22 financial institutions were impacted by the action, which was driven by the lowering of Argentina's country ceiling for foreign currency deposits. Moody's noted that banks probably will have problems honoring their foreign currency debt obligations if banks face restrictions or are unable to respond to foreign currency deposit withdrawals.

Moody's also downgraded the foreign currency subordinated debt ratings of two banks, Banco Macro SA and Banco de Galicia y Buenos Aires SAU to Ca, from Caa3, as well as the senior unsecured foreign currency debt ratings of Banco de la Ciudad de Buenos Aires, Banco Hipotecario SA, Banco Macro, Banco Supervielle SA and Tarjeta Naranja SA to Ca, from Caa2.

In addition, Moody's lowered the baseline credit assessment and adjusted baseline credit assessment of 20 financial institutions. It also confirmed the global scale long-term local currency deposit and debt ratings of 21 financial institutions, and downgraded the local currency deposit and debt ratings of two banks.

The ratings outlook on all financial institutions is now negative, reflecting constraints by the sovereign ratings and country ceilings. The outlook also incorporates the risk of more negative economic scenarios, which could be compounded by the coronavirus pandemic, Moody's noted.

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