S&P Global Ratings said Aug. 29 it downgraded Argentina's sovereign credit ratings to selective default, after the government unilaterally extended the maturity of its short-term debt, a move the rating agency considers a default.
It was the agency's second downgrade in two weeks. On Aug. 16, it cut Argentina's long-term foreign and local currency sovereign credit ratings to B- from B, with a negative outlook, while affirming the short-term ratings at B, citing the market turmoil caused by President Mauricio Macri's defeat in the Aug. 11 primary elections.
But S&P added it intends to upgrade the sovereign credit ratings to CCC- from selective default on Aug. 30. It said the new terms of the short-term debt took effect immediately, meaning the default has been resolved.
Argentine Finance Minister Hernán Lacunza on Aug. 28 announced plans to extend the maturity dates on short-term government debt to give the country a "less demanding" repayment schedule. The government said it also would work on extending the repayment schedule of its $57 billion rescue package with the International Monetary Fund.
A quickly deteriorating financial environment and the absence of market confidence about policy initiatives since the primary elections have led to "heightened vulnerabilities" in Argentina's credit profile, S&P said.
"This has immensely stressed debt dynamics amid a depreciating exchange rate, a likely acceleration in inflation, and a deepening economic recession," the rating agency said.
Also on Aug. 29, the agency lowered Argentina's long- and short-term issue ratings to CCC-/D from B-/B on heightened default risk.
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.