Fitch Ratings: City of Buenos Aires Overcomes Debt Default.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 10, 2003

Fitch Ratings has assigned a 'CCC' rating to the City of Buenos Aires's Euro medium-term-note (EMTN) program. Fitch has also assigned the city a 'CCC' foreign and local currency issuer rating, as well as a 'CCC' rating to the city's outstanding long-term foreign and local currency unsecured debts. The Rating Outlook is Stable for all ratings.

The rating action followed the completion of the restructuring of the city's EMTN program in late February 2003. Upon the announcement of majority noteholders' consent regarding the city's proposed debt restructuring program, Fitch has reevaluated the city's capacity to comply with the revised debt obligations as well as other debts. The amended terms of the EMTN program anticipate future payments of principal starting in mid-2005. The city has crafted terms which will enable it to pay back the EMTNs principal amounts in their entirety within the post-default sovereign crisis environment created by the Argentine government. Consequently, Fitch has assigned a 'CCC' rating to the EMTN program. The rating signals Fitch's favorable view upon the city's initiatives and actions to reorder its debts and the timely response to noteholders with a respectful alternative to an indefinite default.

Fitch views the city's actions favorably, as it is the first high-profile public sector entity in Argentina to complete negotiations with global creditors since the sovereign default of 2001 and to redefine a more sustainable debt burden. Although the response of provincial governments to the crisis has varied substantially since Argentina defaulted on external debt payments, the city has differentiated itself, among those that chose to follow the nation in the default decision, by signaling from the start a willingness to resume payments on negotiated conditions and demonstrate good faith. The decision to choose to default or not to default is especially significant for borrowers with severely reduced access to the global capital markets.

In conjunction with today's rating action, Fitch has published an updated report which examines the city's credit conditions within the context of the amended EMTN program and the release of the city's 2002 results and fiscal 2003 budget. While the city's fiscal autonomy constitutes a credit strength and budgetary rigidities have lessened somewhat, officials must continue to follow a path of fiscal discipline so as to maintain a sustainable debt burden through final amortization. 'Credit Update: City of Buenos Aires, Argentina' can be accessed at Fitch's web site at 'www.fitchratings.com', or by contacting the Ratings Desk at 800/893-4824.