Moody’s Upgrades Argentina‘s Credit Ratings Reflecting Economic Stability
In a positive development for Argentina’s financial landscape, global credit rating agency Moody’s has raised the country’s credit ratings in both local and foreign currencies. The upgrade, announced on Wednesday, is a testament to the "greater predictability and consistency" of Argentina’s economic policies under President Javier Milei’s administration.
The new ratings, reflecting a rapid reduction in monetary and fiscal imbalances driving high inflation, are B3 for local currency debt, up from Caa1, and Caa3 for foreign currency debt, up from Caa1. Moody’s cited the government’s commitment to a reduced role for the state in the economy and less interventionist policies, lowering the risk of transfer and convertibility issues in case of a sovereign default.
Moody’s also noted the government’s elimination of restrictions on cross-border payments and currency exchange rate convertibility, which has increased the country’s foreign currency liquidity despite a low capital account opening. The agency explained that the upgrade in local currency credit ratings balances the increased predictability of the government’s economic and financial system policies against external balances of payments stability.
The upgrade comes ahead of Argentina’s significant debt payment this Thursday. The $4.341 million payment includes both capital and interest on bonds restructured in 2020 under former Economy Minister Martín Guzmán. Market expectations are high for the Treasury to meet this obligation successfully, buoyed by optimism among investors who have seen the country’s risk factor plummet to its lowest level since August 2018.
The announcement of a $1.000 million repo credit has further bolstered market confidence, bringing Argentina’s risk factor close to symbolically significant levels and potentially opening doors to more favorable international financing terms.
The bonds set to mature this Thursday include Bonares (AL29, AL30, AL35, AL38, and AL41) and Globales, denominated in euros (GE29, GE30, GE35, GE38, GE41, and GE46) and dollars (GD29, GD30, GD35, GD38, and GD41).
