Moody's downgrades Argentina from B3 to Caa1Staff writer ▼ | March 21, 2014
The new rating keeps Argentine bonds in the speculative category, although the agency now considers that the country implies "an elevated risk of not meeting debt obligations in foreign currency," it said in a press statement.
"Argentina has no access to international markets, which is why she needs her reserves in order to pay debt obligations in foreign currency," the report continued. Moody's also highlighted "very high inflation,”"which it estimated "will rise much higher than 25%" this year. According to the agency, measures taken to halt increases could lead to a cooling of the economy.
The organization will keep the grade on a "stable perspective"for the coming months, as it predicts that the fall in reserves will slow in the short term; although it signaled that "the government's difficulties in tackling economic imbalances”" implies further risks in the future.
The start of negotiations over unpaid debt with the Paris Club, which will begin on May 26, was nevertheless held up as a "positive step" by the ratings agency. ■