S&P raises Argentina's credit rating by a notch
Published 15/09/2010 | 05:00
STANDARD & Poor's raised Argentina's long-term foreign currency credit rating by one notch as the economy grows around 7pc and the country's borrowings fall.
The upgrade to B from B- came two months after Fitch Ratings raised its rating on Latin America's third largest economy but the rating remains deep in junk territory, S&P said, citing nagging political tensions a year before the next presidential election.
"The combination of a strong economic recovery in 2010, supported by favourable external conditions that are expected to persist over the medium term should ease rollover risk," the rating agency said.
"Despite the prevalence of a confrontational political and economical approach that has increased polarisation, we expect GDP to increase by 7pc in 2010 and 4.5pc in 2011," S&P said.
Economic analysts said the upgrade was a positive sign for the government as it weighs returning to global credit markets for the first time in eight years following completion of a $12.3bn swap of defaulted bonds in June. However, they said it would not be enough to guarantee Argentina the rates it seeks to pay on any new bond sales.
Analysts warned that Argentina's credit ratings will continue to suffer due to the unorthodox economic policies embraced by President Cristina Fernandez and high inflation, running at about 20pc.
The debt repayment plan sparked months of political tensions earlier this year.