NEW YORK – Standard and Poor’s cut Argentina’s already low-level sovereign debt rating by one notch to CCC+ on Tuesday, after the country lost a key case over bond repayments in New York.
The ratings agency said the decision, which Argentina has appealed to the U.S. Supreme Court, could result in it missing payments on debt that has already been restructured twice since the country’s massive default 13 years ago.
“The lawsuit could result in the interruption of payments on bonds currently under New York jurisdiction, or it could prompt Argentina to undertake a debt exchange that we could view as distressed,” S&P said.
If either happens, S&P said, it would have to cut Argentina’s rating again to “selective default,” meaning the country has defaulted on payments on some, but not all, of its debt. S&P said there is a 1-in-3 chance of that happening in the next 12 months.