Fitch, a credit rating agency, has downgraded Argentina’s credit rating for long-term foreign currency (FC) Issuer Default Rating (IDR) from ‘B’ to ‘CC’, and the short-term foreign currency IDR from ‘B’ to ‘C’. According to AP, rating of ‘C’ is just one step above default. That means a default by Argentina is probable.

The US District Judge Thomas Griesa ordered Argentina to pay US$ 1.3 billion to holdout investors in its bonds by December 15. In case Argentina can payout the debt in full, it is quite likely that other holders of debt totaling more than US$11billion will demand an immediate payment for their debts as well.

According to Fitch, “the increased probability that Argentina will not service its restructured debt securities issued under New York law on a timely basis reflects US District Judge Griesa’s decision on Nov. 21 to remove the stay order on the ruling that Argentina must pay 1.33 billion dollars to holdout investors concurrent with or prior to its payments due to holders of the 2005 and 2010 restructured debt.”

The Judge’s decision to remove the stay order on the ruling that Argentina must pay US$1.33 billion has been strongly criticized by Argentine politicians, including those who are in the opposition party.
Investors usually take into account a country’s Fitch rating to judge whether it is safe to invest in the country. Low Fitch ratin