S&P Upgrades Argentina's Credit Rating to CCC+, Exiting Default Status

One Year After Falling to Selective Default
Economic Downturn Possible Again if Political Instability Persists

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Credit rating agency S&P recently upgraded Argentina's sovereign credit rating after successfully restructuring its debt and escaping the risk of default.

On the 7th (local time), S&P announced it would raise Argentina's long-term sovereign credit rating from 'SD (Selective Default)' to 'CCC+'. This comes about a year after it was downgraded five notches from 'B-' to 'SD' on August 29 last year.

S&P cited Argentina's recent debt restructuring as the basis for the upgrade, stating, "Thanks to significant progress, the government now has the opportunity to concretize a broad plan to address various macroeconomic issues following COVID-19."

The Argentine government had effectively entered its ninth default state in May after failing to pay interest due. However, last month it resolved the situation by reaching a debt restructuring agreement with private creditors including BlackRock, covering $65 billion (approximately 77 trillion won). Additionally, it successfully restructured $40 billion of foreign currency-denominated bonds issued under domestic law.

Nonetheless, despite escaping default, Argentina's economy remains in a difficult situation. Due to the impact of COVID-19, Argentina's economic growth rate is projected to be -12% this year. High inflation and pressure on the peso are hindering the Argentine economy.

S&P presented Argentina's rating outlook as 'stable,' but noted that the rating could be downgraded again "if unexpected negative political developments weaken the economic recovery outlook."

This content was produced with the assistance of AI translation services.