By Judith Ugwumadu | 1 August 2014
Standard & Poor’s has cut its credit rating for Argentina after the country missed a deadline for paying interest on restructured government bonds and defaulted on its debt for the second time in 13 years.
The South American country failed to make a $539m payment due on its discount bonds. This was originally due on June 30, was subject to a 30-day grace period, which expired on Wednesday without the payment being made.
S&P said: ‘We are therefore lowering our long- and short-term foreign currency sovereign credit ratings on the Republic of Argentina to selective default from “CCC-/C”.’
Argentina defaulted on after last minute talks with so-called US vulture hedge funds failed. A vulture fund is a hedge fund that invests in debt thought to be very weak or in imminent default.
Argentina’s economy and public finance minister Axel Kicillof said: ‘The Argentina submitted a bid to the vulture funds to enter the swap [on the interest due] in similar conditions in 2005 and 2010. They rejected the offer and asked to be paid more than those who entered the swaps, [which was] to impossible for the State of Argentina,’ he said.
Kicillof said the government ‘will not sign any commitment to compromise the future of Argentina and will defend the exchange we have done so successfully with 92.4% of those who voluntarily entered'.’
