Moody’s downgraded debt ratings of several Argentine provinces and cities

Moody's Investor Service announced on Wednesday it has downgraded the issuer and debt ratings of several provinces and cities in Argentina, due to the risks these states may face to access foreign currency and “serve their obligations in foreign currency.”

Chaco Governor Jorge Capitanich paid interests on bonds in Pesos instead of dollars

The agency stated in a communiqué that it had downgraded these ratings in order to put them at the same level or below the country's B3 negative sovereign bonds ratings.

Besides, the provinces' debts rating has been downgraded one notch below the sovereign rating, to Caa1.

This measure was aimed to: Buenos Aires City, Chubut province, Mendoza City, Mendoza province, Córdoba City, Buenos Aires province, Córdoba province, Río Cuarto City, Chaco province and Formosa province.

“With the exception of the Province of Formosa, the outlook for all the rated provinces and municipalities in Argentina is negative and follows the negative outlook of Argentina's B3 local and foreign currency government bond ratings. Formosa's issuer and debt ratings were placed under review for a possible downgrade,” Moody's assured in its press release.

Earlier in the day Chaco province Governor Jorge Capitanich announced he will further advance with the tackling of the province’s dollar debt, by issuing a bond in Pesos in order to pay it off.

“We are soon to set up a system that will allow the payment be made in Pesos. We are to exchange these bonds for Pesos. The debt is to be converted entirely into Pesos,” Capitanich said on Wednesday in an interview with Diario Norte.

Chaco province is currently in 4.7 billion dollars in debt. Governor Capitanish is seen as responsible for triggering the current wave fear when earlier this month he paid interest on US dollar denominated bonds in Pesos since allegedly he was unable to obtain the currency from the Central Bank.

Capitanich is a close ally of President Cristina Fernandez and his name is considered among the ascending figures in the Kirchnerite bunker.

In related news the US dollar traded in Buenos Aires on Wednesday at 4.705/4.745 Pesos, remaining unchanged compared with the previous closing price. However on the black market, the US currency climbed eleven cents, closing at 6.33 Pesos buying price as the so called ‘dollar clamp’ becomes tighter.

http://en.mercopress.com/2012/10/18/moody-s-downgraded-debt-ratings-of-several-argentine-provinces-and-cities