Argentine bonds rise after default as Fitch, S&P cut ratings
Walter Bianchi and Hugh Bronstein
Over-the-counter bonds rose 3.8%, while country risk tightened 243 basis points to 2,535 over U.S. Treasuries, amid hopes negotiations to revamp $65 billion in debt would take “days, not months”.
Argentina and its creditors are in talks to reach a deal by an already pushed-back deadline of June 2 to avoid the country falling into a messy default that could spark years of legal wrangling over payouts.
Fitch on Tuesday downgraded Argentina’s sovereign rating to restricted default due to the missed payment relating to three bonds on Friday after a 30-day grace period on the payments expired. It cut the ratings on the bonds themselves to default.
S&P cut the three bonds and a fourth local-law dollar bond to default and said they would remain there “pending conclusion of the debt renegotiations that are currently underway.”
Fitch acknowledged restructuring talks were moving forward, though it said an agreement would need to fulfill collective action clauses on the bonds.
“The parties involved have indicated recent progress toward a comprehensive restructuring, although uncertainty remains around the prospects for reaching a deal,” it said.