Fitch Cuts Argentina’s Outlook to Negative After Court Ruling
Fitch Ratings cut Argentina’s credit outlook to negative after a U.S. court ruling in favor of holders of the country’s defaulted bonds increased concern the government may not honor its debt.
Argentina’s B rating on its long- and short-term foreign currency debt, which is five levels below investment grade, was placed on credit watch negative, according to a statement today. The local currency debt rating was affirmed at B.
The action “reflects increased uncertainty about Argentina’s ability to service its international securities issued under New York Law on a timely basis using the U.S. financial system following the recent U.S. Appeals court ruling,” analysts Lucila Broide and Santiago Mosquera wrote.
The U.S. Court of Appeals for the Second Circuit in New York ruled on Oct. 26 that Argentina can’t make payments on restructured sovereign debt while refusing to pay holders of its defaulted bonds because doing so would discriminate against bondholders. The decision upheld orders issued by U.S. District Judge Thomas Griesa in Manhattan.
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