Argentina Pushes for Appeal, Sees Downgrade

Argentina’s government has filed to appeal the most recent US court judgment, it says, while Fitch has lowered its rating to CC on the likelihood of a default. In an attempt to avoid a default next month, Argentina appealed a US court order issued last week to pay $1.3bn to holdout creditors. The order is based on a previous ruling that Argentina must treat holdouts equally to bondholders who accepted 2005 and 2010 bond swaps. In a new twist, the government says that if the US judge arranged a formula offering holdouts the same terms presented in the 2010, Argentina’s Congress could debate it. It is unclear if such a move could be worked out ahead of December 15, when a $3bn payment on GDP-linked warrants to the restructured bondholders is due. “A missed payment on the GDP-linked warrants could trigger a cross default on all exchanged debt securities issued under international law. Subsequently, a missed coupon payment of any other external securities would also trigger a cross default on all exchanged bonds issued under international law,” Fitch says in a report lowering Argentina’s rating to CC from B. The outlook is negative. An Argentina default could set a precedent endangering future restructurings, analysts say.