The global rating agency Moody's Ratings has upgraded Argentina's long-term debt rating from 'Ca' to 'Caa3' and changed the outlook from stable to positive. This change is attributed to the government's efforts to correct macroeconomic imbalances and a lower likelihood of entering into default.
In this regard, Moody's indicated: 'There are still significant risks to the country's ability to cover upcoming external debt payments, such as those related to the removal of exchange and capital controls or negative shocks that could trigger a credit event with significant losses for bondholders.'
The positive outlook indicates the potential for a possible upgrade in ratings as Argentina makes progress in its macroeconomic adjustment. Moody's highlighted that an orderly transition to a more open capital account would be consistent with higher ratings.
The agency also removed the short-term ratings in dollars and pesos, previously at 'Not-Prime,' and the senior unsecured ratings, previously at 'Ca.' A three-notch gap is mentioned between the local currency ceiling and the sovereign rating of Caa3, balancing the increasing predictability of governmental actions with the weakness in the stability of the balance of payments.
As for Argentina's country ceilings in local and foreign currency, they remain at B3 and Caa1, respectively. Additionally, Moody's has increased Argentina's long-term debt ratings in both dollars and pesos, reflecting a more positive outlook on the country's economy.
