Fitch rates Argentina bonds B-

Fitch Ratings said it assigned a prospective B- rating with a recovery rating of RR4 to the soon-to-be-issued Republic of Argentina's Bonar V five-year, dollar-denominated bond to be issued under Argentine law. The outlook will be stable.

Fitch said it generally assigns a B- to bonds issued under Argentine law, such as the Bonar V, and assigns a CCC+ rating to bonds issued under foreign law, regardless of currency denomination. This reflects the concern that potential claims in foreign courts against the government of Argentina, resulting from Argentina's bond default and restructuring from 2001 to 2005, could pose an ongoing risk that payments on bonds issued under foreign law could be exposed to attachment by foreign courts.

Likewise, Fitch's foreign currency issuer default rating for Argentina remains in Restricted Default, reflecting the fact that a sizable portion of bond debt remains in default following last year's debt exchange because non-participants in the exchange (the so-called "holdouts") still represent a significant portion of debt outstanding. Until Argentina deals satisfactorily with the "holdouts" so that the risk of attachment in foreign courts of new bond issues is markedly reduced, Fitch said a normalization of the country's relations with creditors will not have advanced far enough for the ratings to be upgraded.

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