Banking

Fitch says Argentina's debt challenges go beyond liquidity

Credit: REUTERS/Agustin Marcarian

Ratings agency Fitch said on Thursday Argentina's weak credit fundamentals, in terms of both liquidity and solvency, limit the scope for a debt exchange that minimizes losses for investors beyond maturity extensions.

Oct 24 (Reuters) - Ratings agency Fitch said on Thursday Argentina's weak credit fundamentals, in terms of both liquidity and solvency, limit the scope for a debt exchange that minimizes losses for investors beyond maturity extensions.

The Latin American country has been struggling with a major debt crisis after a market crash in August hammered its peso currency and sovereign bonds, forcing it to delay payments on about $100 billion of debt.

Fitch said a deal that offers the country minimal debt relief focused on liquidity rather than sustainability would require too much of a fiscal adjustment to be politically or economically viable.

The passage of such a deal would come with a high risk of renewed debt distress in the future if there is no unforeseen positive economic shock in Argentina, the ratings agency said.

Fitch said it believes a deal that offers permanent debt relief via a haircut or coupon reduction, rather than just postponement of debt service, could be needed to more fully mitigate Argentina's debt sustainability challenges.

(Reporting by Nishara Karuvalli Pathikkal; Editing by Maju Samuel)

((Nishara.KaruvalliPathikkal@thomsonreuters.com; within U.S. +1 646 223 8780, outside U.S. +91 80 6749 6633;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

World Markets US Markets

Latest Personal Finance Videos

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More