S&P Global Ratings downgraded Argentina's foreign-currency sovereign credit ratings to selective default after the government unilaterally extended its repayment of dollar-denominated short-term debt, the second such move in less than four months.

The rating agency said the government's move constitutes default in its criteria as it lowered Argentina's long- and short-term ratings to SD/D from CCC-/C. It also downgraded the country's long-term issue and local-currency sovereign credit ratings to CC from CCC- and affirmed the short-term rating at C.

S&P warned that uncertainty remains about Argentina's broader debt management strategy under the administration of new President Alberto Fernández, particularly for peso-denominated obligations due for payment over the next few weeks. The agency said clarity on whether the peso-denominated obligations will be repaid in time will help determine whether Argentina's ratings could be upgraded from SD.

The downgrade of the long-term issue and local-currency sovereign credit ratings reflects the heightened vulnerability of a distressed debt exchange as the Fernández administration has signaled a restructuring of all long-term debt with the private sector. Such a restructuring could entail an extension of the obligations' maturities or a reduction in their face value, the agency noted.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.