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Fitch, others downgrade Argentina; S&P upgrades the country

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Fitch, others downgrade Argentina; S&P upgrades the country

Moody's, Fitch Ratings and DBRS downgraded Argentina after the country unilaterally extended the maturity of its short-term debt.

Fitch downgraded Argentina's long-term foreign- and local-currency issuer default ratings to restricted default from CCC, while its short-term ratings were cut to restricted default from C.

"In accordance with its criteria, Fitch believes Argentina is in default on its sovereign obligations and that this development constitutes a 'distressed debt exchange,'" Fitch said.

Separately, DBRS downgraded Argentina's long-term foreign and local currency issuer ratings to CC from B/B (high) and placed them under review with negative implications. The short-term foreign and local currency issuer ratings were lowered to selective default.

DBRS said the outlook for Argentina is expected to remain challenging following President Mauricio Macri's defeat in the Aug. 11 primary elections and exchange rate pressures.

"The loss of confidence in the peso, unless reversed quickly, will increase risks to debt sustainability given the high levels of foreign currency debt," DBRS said.

Moody's also lowered Argentina's foreign- and local-currency long-term issuer and senior unsecured ratings to Caa2 from B2. The rating agency revised the negative outlook on the ratings, placing them under review for downgrade.

The downgrade reflects "rising expectation of losses for investors as a consequence of mounting pressures on the government's finances," according to Moody's.

Meanwhile, S&P Global Ratings upgraded the country's foreign and local currency sovereign credit ratings to CCC-/C and short-term issue ratings to C from D.

The rating agency, which previously lowered Argentina to selective default on Aug. 29, said the amended terms for Argentina's short-term debt took effect and cured the default.

The outlook on Argentina's long-term ratings is negative, S&P said, reflecting "prominent downside risks" to timely and full debt payment over the coming months amid "very complex political, economic, and financial market dynamics."

"[T]here is heightened risk of a default under our criteria," S&P said as Macri's government continues with its efforts to re-profile long-term debt.

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.