Argentina in Default: Buenos Aires Times

Two rating agencies, Fitch and S&P reduced Argentina’s bonds to default status after the nation missed a $US500-million payment. Negotiations for debt restructuring are underway, with the hopes of agreement and possible rise in the bond rating. A lower rating forces nations to pay higher interest rates. Argentina’s public debt is 90 percent of GDP at the end of 2019. The Covid-19 pandemic has complicated finances, forcing many countries to borrow to provide health care and boost economies during shutdown periods. “President Alberto Fernández’s government is locked in talks with creditors to restructure US$65 billion in overseas securities,” reports Buenos Aires Times. “Argentina is burdened by inflation nearing 50 percent and an economy that was shrinking even before the pandemic hit. The government has said Argentina needs US$40 billion in debt relief to set it back on the path to sustainable growth and officials have been in talks with bondholders for two months.” – YaleGlobal

Argentina in Default: Buenos Aires Times

Argentina’s ninth default on external debt is now official after Fitch and S&P cut bond ratings to default status
Wednesday, June 3, 2020

Read the article from Buenos Aires Times about Argentina’s ongoing debt crisis. The article combines reports from the Times, AFP and Bloomberg

Read more about bonds and credit ratings from Investopedia: “The probability of a negative credit event or default affects a bond’s price – the higher the risk of a negative credit event occurring, the higher the interest rate investors will demand in exchange for assuming that risk.”

Read the International Monetary Fund technical note on Argentina’s debt.

Argentina has more than 18,000 confirmed Covid-19 cases and 570 deaths.  Brazil reports the most cases in South America, followed by Peru, Chile, Ecuador, Colombia and Argentina.   

Read an essay from Discover Society about how Argentina cannot use debt in a sustainable way for the Covid-19 crisis: “The infringements on human rights through authoritarian rule carries added connotations of violations of the many military dictatorships of the mid and late-20th century in Latin America. Furthermore, the manner in which the lockdowns have exacerbated inequalities – especially in communities where informal work is more prevalent and social distancing is more difficult, if not impossible – have been felt more acutely amongst the poorest in Latin American societies, leaving them more susceptible to contracting the virus and facing impossible choices to either stay home or feed families.”

 2010	44%  36% 2012 40% 44% 2014 45%  53% 2016 53%  57% 2018 86%  89%
(Source: Trading Economics)
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