Moody’s downgrades Argentine provinces, municipalities

Moody’s Investors Service said it downgraded the issuer and debt ratings on a global scale of Argentine provinces and municipalities. The agency also placed their ratings on review for downgrade.

The downgrades follow the rating action on Argentina.

The downgrades mirror the very close economic and financial linkages between the national and local provincial governments, the agency said.

“Moody’s considers that Argentine sub-sovereigns’ credit quality will be negatively affected by the rise of significant systemic risks stemming from the sovereign. For the remainder of 2019, Moody’s expects sub-sovereigns to see their credit quality deteriorate as a result of constrained market access, exchange rate pressures, increased financing costs and persistently high inflation.

“As a result, the liquidity position and fiscal flexibility of Argentine sub-sovereigns will deteriorate markedly while their debt service burden will increase,” Moody’s said in a press release.

Moody’s downgraded the following:

• Province of Buenos Aires’ foreign currency debt ratings to Caa2 from B2;

• Province of Cordoba’s foreign and local currency issuer and foreign currency debt ratings to Caa2 from B2;

• Province of Mendoza’s foreign and local currency issuer and foreign currency debt ratings downgraded to Caa2 from B2;

• Province of Santa Fe’s foreign currency issuer and debt ratings downgraded to Caa2 from B2;

• Province of Chaco’s foreign currency issuer and debt ratings downgraded to Caa2 from B2;

• Province of Chubut’s foreign currency issuer rating downgraded to Caa3 from B3 and foreign currency debt ratings downgraded to Caa2 from B2;

• Province of Rio Negro’s foreign currency issuer and debt ratings downgraded to Caa2 from B2;

• Province of Tierra del Fuego’s foreign currency issuer rating downgraded to Caa3 from B3 and foreign currency debt ratings downgraded to Caa2 from B2;

• Municipality of Cordoba’s foreign currency issuer and debt ratings downgraded to Caa2 from B2; and

• City of Buenos Aires’s foreign and local currency senior unsecured debt ratings downgraded to Caa2 from B2.

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