UPDATE - Fitch Downgrades Argentina Sovereign Ratings In Wake Of Macri's Defeat - Statement

Fahad Shabbir (@FahadShabbir) Published August 17, 2019 | 07:10 AM

WASHINGTON/MOSCOW (UrduPoint News / Sputnik - 17th August, 2019) Argentina's credit rating has been downgraded due to increased political risks driven by the recent electoral defeat of the country's incumbent president, Fitch Ratings announced in a press release.

"Fitch ratings has downgraded the sovereign ratings of Argentina, including the Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'B,'" the release said on Friday. "The Primary election results point to heightened risks of policy discontinuity following the [upcoming] October 2019 general elections. This has prompted a collapse in market sentiment, including a sharp depreciation in the peso and widening of sovereign debt spreads."

Meanwhile, Standard & Poor's (S&P) on Friday lowered Argentina's credit rating, too.

"On Aug. 16, 2019, S&P Global Ratings lowered its long-term foreign and local Currency sovereign credit ratings on Argentina to 'B-' from 'B'. The outlook is negative. We also affirmed our 'B' short-term foreign and local currency sovereign credit ratings.

At the same time, we placed our 'raAA-' national scale rating on Argentina on CreditWatch with negative implications and lowered our transfer and convertibility assessment to 'B' from 'B+'," S&P said in a statement.

The agency explained its decision by "pronounced financial market turbulence" and increased challenges for policymakers.

"The negative outlook reflects the risks Argentina faces as the authorities work to stabilize the economy and financial markets. Along with this, uncertainty continues on the private sector's predisposition to roll over government debt and hold pesos while depreciation stresses the government's high financing needs," S&P explained.

Incumbent President Mauricio Macri won only 32.1 percent of the vote against his challenger Alberto Fernandez's 47.7 percent in last Sunday's election.

The primary elections results prompted a sharp drop in peso rate and an increase in economic instability.