'Selective default': Ratings agencies downgrade Argentina after payment freeze
S&P adjusted Argentina's rating to "selective default" on Tuesday, after government freeze payments on dollar-denominated debt under local law. Move follows in the footsteps of downgrades from Fitch and Moody's.
Standard & Poor's Global followed in the footsteps of two other agencies in downgrading Argentina's rating on Tuesday.
S&P downgraded Argentina's rating to "selective default" after the country announced that it would freeze payments on dollar-denominated debt issued under local law until the end of the year.
The downgrade of Argentina's long and short-term foreign currency issuer rating of "CCC- /C" follows Fitch's decision to downgrade Argentina to "restricted default" on Monday. Moody's announced a similar downgrade on April 3.
"This constitutes a default under our distressed exchange criteria," S&P wrote in a statement. "We also affirm local currency sovereign credit ratings in SD/SD," the statement added.
"The Covid-19 crisis has exacerbated Argentina's already stressed fiscal needs and resources, leading the administration of President Alberto Fernández to reconfigure its financial planning and budgetary priorities," the agency said.
"We view this unilateral extension as tantamount to default under our criteria. The decree formally differentiates Argentine-law dollar-debt from foreign-law foreign-currency-denominated debt," S&P said.
S&P added that the likelihood of Argentina experiencing another foreign-currency default is "virtually certain."
The government said on Sunday night that it will suspend all payments of foreign currency securities issued on the domestic market for the rest of the year, as it prioritises propping up the economy that has been in recession for two years and tackling the coronavirus pandemic.
Moody's said in a statement on April 3 that it was downgrading Argentina a notch from 'CA' to 'CAA2' amid fears that the coronavirus crisis would worsen creditors' losses.
"The note reflects Moody's expectations that private investors incur significant losses under the current government's restructuring scheme," the financial rating agency said.