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Publication date: 09-Oct-2001 Reprinted from RatingsDirect News Long-Term Sov. Rtg on Argentina Lowered to `CCC+`, Short-Term Rtg Affirmed, Outlook Negative Analyst: Bruno Boccara, New York (1) 212-438-7495; Laura Feinland Katz, New York (1) 212-438-7893; Jane Eddy, New York (1) 212-438-7996 NEW YORK (Standard & Poor`s) Oct. 9, 2001--Standard & Poor`s today lowered its long-term sovereign credit rating on the Republic of Argentina to triple-`C`-plus from single-`B`-minus, and affirmed the `C` short-term sovereign credit rating. The outlook remains negative. The downgrade reflects the increasingly severe economic and social challenges Argentina faces in balancing the federal budget. Low tax revenues for September and the likely need for $900 million in additional spending cuts highlight the mounting challenges the government faces in implementing its fiscal program. Standard & Poor`s believes that despite the commitment of the federal government, prospects for achieving the "zero deficit" budget goal for 2001 and maintaining budgetary austerity in 2002 while ensuring timely debt service has continued to wane since the policy was announced on July 11, 2001. Thus far, the Republic has met its monthly budgetary objectives in part by accumulating arrears of $480 million of transfer payments due to the provinces. Low consumer confidence, the severe local credit crunch, and the global economic slowdown have resulted in continued negative GDP growth, industrial output, and tax collection trends. Although the reported year-over-year 14% drop in revenue collections in September incorporated some one-time effects, such as increased valued-added tax reimbursements and pension contributions, the decline is significant and confirms the battered economy shows no signs of stabilizing. Thus, all efforts to balance the budget must continue to focus exclusively on further spending cuts. Growing internal challenges lessen the government`s budgetary maneuverability. Moreover, given these pressures, Standard & Poor`s view is that, regardless of the outcome of the legislative elections of Oct. 14, Argentina is increasingly likely to have to restructure its debt. Due to the "mega-debt exchange" undertaken in June, the government`s near-term debt servicing burden is manageable, assuming balanced fiscal operations. Additionally, while Argentina can cover its financial needs without accessing international capital markets for almost a year, internal debt (Letes) must continue to be rolled; given domestic market dynamics, the risk of an inability to do so still remains low. OUTLOOK: NEGATIVE Argentina`s ratings could be lowered again if political, economic, and social factors frustrate the government`s efforts to keep the fiscal situation under control. Following heavy outflows, private-sector deposits stabilized when the IMF announced additional financial support. However, these flows are confidence-sensitive and renewed outflows would place the economy under additional strain and further undermine prospects for growth, as it severely impairs domestic credit. This report was reproduced from Standard & Poor`s RatingsDirect, the premier source of real-time, Web-based credit ratings and research from an organization that has been a leader in objective credit analysis for more than 140 years. To preview this dynamic on-line product, visit our RatingsDirect Web site at www.standardandpoors.com/ratingsdirect. Standard & Poor`s. Setting The Standard. |
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| aus der Diskussion: | Ausfall von Staatsanleihen |
| Autor (Datum des Eintrages): | MrDiamond (10.10.01 22:36:59) |
| Beitrag: | 69 von 190 (ID:4610346) |
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