Argentina's credit rating has been downgraded by Fitch Ratings to the lowest level above default as the government plans to force state institutions to dispose of their holdings of dollar-denominated bonds.
The South American country's rating was downgraded two notches to C from CCC- by Fitch, according to a statement sent on Friday.
The debt swap, announced in an official government decree on Thursday, would involve unilateral swaps and forced currency conversions that qualify as a default under Fitch's criteria.
"The 'C' rating reflects Fitch's view that a default is imminent," wrote Fitch analysts led by Todd Martinez. The rating agency said that Argentina's score would be downgraded to restrictive default when the swap occurs.
State-owned banks and public pension fund Anses will swap 100 per cent of their holdings of foreign bonds under New York law for peso-denominated debt. Peso bonds maturing in 2036 will pay the higher yield of a dollar-linked or inflation-linked option.
Moody's Investors Service gave the country a Caa3 rating, the third lowest score with a stable outlook. S&P Global Ratings rated the country two notches higher with a negative outlook.
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by Maria Elena Vizcaíno, Bloomberg
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