Fitch Downgrades Argentina World Bank Gtd Notes Ser E & F.Business Editors NEW YORK--(BUSINESS WIRE)--Nov. 6, 2001 Fitch, the international rating agency, has downgraded the Republic of Argentina's World Bank guaranteed series E and F zero coupon notes to 'B+' from 'BB-'. Although Fitch downgraded Argentina's sovereign ratings to 'C' from 'CC' today due to the distressed debt distressed debt Debt with low junk status and a market price substantially below par value, often pennies on the dollar. Investors sometimes buy distressed debt on the possibility that management can renegotiate loan agreements and keep the issuer out of exchange, the Argentina World Bank notes are not included in the exchange. In the near-term, sovereign debt that is not part of the exchange will not technically be in default and are rated 'CC'. Since the series E and F notes are not part of the exchange, the ratings remain six notches higher than 'CC'. The ratings on the series E and F notes reflect the likelihood that Argentina will continue to pay these notes even as it defaults on other sovereign debt. Argentina has strong incentives to honor this debt, as a default would jeopardize jeop·ard·ize tr.v. jeop·ard·ized, jeop·ard·iz·ing, jeop·ard·izes To expose to loss or injury; imperil. See Synonyms at endanger. its ability to borrow from the World Bank, a preferred creditor preferred creditor A creditor having priority to payment over one or more other classes of creditors. For example, holders of first mortgage bonds must be paid by the borrower before payments are made to holders of second mortgage bonds on the same . Despite the deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in its sovereign ratings, Argentina continues to maintain its relationships with multilateral mul·ti·lat·er·al adj. 1. Having many sides. 2. Involving more than two nations or parties: multilateral trade agreements. lenders. The 'AAA' rating on the series D notes is affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. and is based on the 100% guarantee provided by the World Bank. This guarantee will roll over to the next consecutive series of notes upon payment in full of the outstanding notes with the earliest maturity. At that point, the next series will be rated 'AAA'. For more information on the transaction, the following reports are available via FitchResearch, Fitch's subscription-based web site at 'www.fitchratings.com': 'The Role of Multilaterals in Structured Finance' and 'Rating Structured Transactions with World Bank Guarantees'. Fitch will continue to monitor the transaction, as surveillance is ongoing. |
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