Milei’s turnaround effort wins Argentine credit upgrade from Fitch Ratings

Argentina’s credit rating was raised two notches by Fitch Ratings, which said it expects the government will make upcoming payments on hard-currency bonds.

Fitch lifted the South American nation’s long-term rating to CCC from CC, eight notches below investment grade and on par with Bolivia. Fitch doesn’t assign an outlook for that rating. 

The upgrade “reflects developments that have improved Fitch’s confidence in the authorities’ ability to make upcoming foreign-currency bond payments without seeking relief of some sort,” Fitch analysts including Todd Martinez wrote in a statement Friday. 

Officials have repeatedly said they are committed to making good on a series of debt obligations. The treasury late last month moved to buy US$2.7 billion from the Central Bank for forthcoming bond payments. The government is also negotiating with international banks for a credit line. 

About US$4.3 billion is due in January for dollar bonds issued under Argentina and New York laws, according to Fitch. 

The decision comes against a broader backdrop of bullish investor sentiment toward Argentina. Wall Street has cheered President Javier Milei’s efforts to bring dollars back into the economy, reverse years of budget deficits and squash triple-digit inflation. 

For all of the optimism, though, Milei’s refusal to budge on ending the country’s thicket of currency controls continues to raise concerns about the government’s efforts to rebuild hard-currency reserves.

“Risks to repayment capacity persist, however, as captured in the ‘CCC’ rating, given still uncertain prospects for a transition to monetary and exchange-rate policies that can ensure a durable improvement in reserves and recovery of market access,” Fitch’s Martinez added.

Argentina’s benchmark dollar bonds due in 2035 were little changed Friday, trading at some 62 cents on the dollar, according to pricing data compiled by Bloomberg.