Fitch Ratings on Dec. 23 upgraded Argentina's foreign currency issuer default ratings to CC from RD, or restricted default.

The rating agency considered that the process of "distressed debt exchange," or DDE, which resulted from the Argentine government's unilateral extension of repayment on Letes — short-term U.S. dollar-denominated treasury bills — had concluded.

"The DDE has effectively concluded as the new repayment schedule has taken effect," Fitch stated in a press release, warning however that the CC rating indicates a high probability of a default on Argentina's sovereign obligations.

It remains to be seen if this likely default will take the form of a new DDE, or a more traditional payment default, the rating agency noted.

Although economic measures such as tax increases and tighter capital controls could support the country's ability to fulfill its debt obligations in the short term, the burden of around $25 billion in debt servicing between March and May of 2020 and a further $64 billion that year could prove "especially difficult," the agency added.

Fitch emphasized that "a successful restructuring is likely to require greater clarity on a multi-year fiscal and financing strategy," and that it considers progress to be partly dependent on the stalled program with the IMF.

Fitch had lowered the sovereign's foreign currency issuer default ratings to RD on Dec. 20, the same day the Argentine government announced it would push approximately $9 billion in Letes repayments back to August 2020. S&P Global Ratings also downgraded Argentina's foreign currency sovereign credit ratings to selective default on Dec. 22.

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