Moody’s lowers bond outlook

August 02, 2014 - 12:00:00 am

PARIS: Ratings agency Moody’s left its note on Argentina’s bonds unchanged but lowered their outlook to “negative” in the wake of this week’s effective debt default.

“Moody’s considers that non-payment of debt obligations to creditors after a grace period has expired is a default,” it said, adding that the move will add to existing inflationary pressures and worsen struggling foreign exchange reserves.

“Argentina is mired in stagflation with a GDP that declined 0.2 percent year-over-year during the first quarter and high inflation of over 30 percent, driven in good part by continued currency depreciation,” it said.

“The default is likely to exacerbate the economic contraction, increase pressure on the exchange rate, and push inflation even higher,” the ratings agency said.