Argentina May Be Cut by S&P After Missed Bond Interest Payment

Argentina’s CCC- credit rating was placed on creditwatch negative by Standard & Poor’s after the nation missed a coupon payment yesterday.

The move reflects at least a 50 percent chance that the nation won’t make the payment before a 30-day grace period ends July 30, the ratings company said in a statement today. Argentina’s $539 million payment on international bonds due 2033 was blocked by a U.S. judge, who said the nation was violating his order to simultaneously pay a group of holdout creditors who successfully sued for their money.

Argentina’s ratings will be lowered to selective default if the nation fails to make a payment by the end of the grace period, S&P said. Argentine President Cristina Fernandez de Kirchner has said she wants to negotiate with holders of defaulted debt to avoid a second default in 13 years.

S&P has decided to “wait until the expiry of the grace period before resolving the CreditWatch because we see a sufficient chance that negotiations between Argentina and the holdout bondholders will conclude without Argentina defaulting under our criteria,” the company said.

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