(Recasts throughout, adds comment)
March 24 (Reuters) - Fitch Ratings on Friday cut
Argentina's foreign currency rating to "C" from "CCC-" citing an
"imminent" default after the country ordered public sector
bodies to sell or exchange their holdings of some sovereign
dollar bonds.
A presidential decree said on Thursday that public sector
bodies would have to sell or auction five local law dollar bonds
maturing between 2029 and 2041, and to swap six foreign law
dollar bonds for peso debt.
The "C" rating reflects an imminent default as the
presidential order would involve one-sided exchanges and forced
currency conversions, Fitch said. Once the exchanges are
executed, the rating will be lowered to Restricted Default.
"These measures merely give the government some temporary
breathing space and fail to address the fundamental issue that
the peso is too strong," said Kimberley Sperrfechter, emerging
markets economist at Capital Economics in a note, calling it
"yet another desperate attempt to support the peso and ease
pressure on FX reserves."
Fitch also said Argentina's long-term local currency credit
rating is affirmed at "CCC-" as peso-denominated securities are
not affected by the decrees, but "repayment capacity remains
highly compromised."
The International Monetary Fund said on Thursday it was
assessing Argentina's debt exchange announcement in accordance
with the objectives of their $44 billion debt program.
Moody's had said Argentina's $1 billion dollar debt
repurchase announced in January was effectively a default, while
S&P Global and Fitch stopped short of calling it that.
In October, Fitch downgraded the country's long-term
sovereign credit rating to "CCC-" from "CCC", citing deep
macroeconomic imbalances and rising risks over Argentina's
ability to meet future debt repayments.
(Reporting by Shivansh Tiwary in Bengaluru and Rodrigo Campos
in New York; Editing by Shounak Dasgupta and Alistair Bell)
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