Moody's: Argentina view negative

Moody's Investors Service said it changed the outlook on Argentina's B3 local- and foreign-currency government bond ratings to negative from stable.

The B3 ratings themselves, as well as the B2 foreign currency bond ceiling, Caa1 foreign currency deposit ceiling and the Ba3 local currency bond and deposit ceiling remain unchanged.

Moody's said its decision to change the outlook to negative was driven by the following factors:

• The expectation of a continued haphazard policy environment, evidenced most recently in the nationalization without compensation of YPF, Argentina's largest oil company, and import controls that have stalled economic growth;

• Ongoing and growing concerns about the quality and reliability of Argentina's official data reporting, specifically about inflation and GDP estimates that continue to be significantly at odds with private sector estimates. Underreporting of inflation is particularly credit negative given that over 20% of Argentina's government debt remains indexed to inflation; and

• A lack of resolution to Argentina's debt arrears with Paris Club creditors, which has been pending for several years and shows no signs of an eventual resolution, raising fundamental questions about the sovereign's willingness to pay.

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