The risk of corporate and provincial indebtedness increases …

The international agency Moody's lowered the rating (reliability) of debt securities of several Argentine front-line companies, including Arcor and YPF, as well as debt from provincial and municipal governments. In its report, the risk rating agency – one of the three most prestigious in the world – stresses that the review of ratings to "sub-sovereign issuers" of debt stems from the decline in the rating already announced national state bonds. "The credit quality of sub-national entities (provinces and municipalities) in Argentina will be affected by the increase in significant systemic risks" arising from the uncertainty surrounding debt at the national level.

Moody's expects, for the remainder of 2019, that provincial and municipal debt obligations see "credit quality deteriorated due to market access restrictions, currency pressures, high financial costs and still high inflation". He added that "the situation with regard to the liquidity and budgetary flexibility of the Argentine sub-sovereigns will deteriorate significantly, in parallel with the increase in their burden for the debt service", that is, the interests to pay. The debt securities obtained by this decrease in the rating are those corresponding to the City of Buenos Aires, the provinces of Buenos Aires, Cordoba, Chaco, Chubut, Formosa, Misiones, Rio Negro and Tucumán; and the municipality of Córdoba.

Businesses

On the other hand, the report indicates that the risk rating of marketable bonds and unsecured bank credit lines of companies from different business sectors in Argentina has been lowered. The details of the examination of the qualifications is as follows:

Arcor SAIC. Senior marketable bonds fall under B3 / A3;

YPF SA. The bank credit line and issuer rating were downgraded to Caa2 / B1. The rating of the main global marketable bonds moves to Caa2, as does the medium-term marketable bond program.

Telecom Argentina SA. Lower your "family rating" to Caa1 / Baa3 and marketable senior bonds.

The discharge in the ranking of the debts of Mirgor, Raghsa, Association of Argentine Cooperatives and Sullair.

Extended examination

As Moody & # 39; s Latin America explains in his statement, "this broad rating action taken on all sub-sovereigns stems from the fall in ratings badigned to Caa2 (since B2, the previous rating) corresponding to bonds sovereigns of local and foreign announced on August 30, and reflects the very strong economic and financial interrelations between the Argentine government and the Argentine sub-sovereigns. "

"Moody's expects the review period to extend beyond the usual three-month horizon," the report adds. "The review will focus on the formulation of sovereign policies in the current context of market volatility. In addition, the review will focus on the specific liquidity pressures and financial strength of subnational entities. in times of economic contraction and expected inflationary pressures"