Moody's rates Buenos Aires bonds B3

Moody's Investors Service said it assigned B3 global scale and foreign currency debt ratings and an A3.ar Argentine national scale rating to the new foreign currency bonds offered by the Province of Buenos Aires in exchange for $2.7 billion previously issued foreign currency bonds (rated Ca), on which the province suspended payment on Dec. 31, 2001. The new bonds were accepted by holders of some $2.53 billion (nearly 94%) of the old bonds, Moody's said.

The old bonds subject to the exchange bore coupons generally higher than those of the new bonds and matured in 2010. The new bonds pay principal semiannually beginning in 2012 and reach final maturity in 2035.

Moody's said the ratings reflect economic recovery evident in the province and in the nation, which has supported strong revenue growth in the years 2002 through 2005. These revenue gains have contributed to better financial performance.

The ratings also acknowledge the considerable economic uncertainty and financial pressures still facing the province, as well as its continued reliance on the federal government to finance its fiscal deficit, including the need to refinance principal maturities as they come due, the agency said.

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