RIO DE JANEIRO, BRAZIL – Moody’s downgraded Argentina’s rating from Caa2 to Ca on Friday, April 3rd, with a negative outlook. The agency says it concluded its review of the rating that began on August 30th, 2019.
The Ca rating is just above that given to countries in default on their obligations. The agency believes that private creditors will face “substantial losses” in the current government debt restructuring process, in addition to saying that the financial and economic shock caused by the coronavirus pandemic forces the government to reduce its next debt payments in the following years.
The negative outlook, according to the agency, reflects the risk that investors will incur losses exceeding those consistent with the Ca rating, “which typically captures losses of up to 65 percent”.
The lack of access to markets and the stress on liquidity, aggravated by the pandemic, point to a debt restructuring that “will result in substantial losses for private investors,” Moody’s estimates in a report.