Argentina was assigned a selective default

The stock market of Argentina again collapsed on the decision of the S&P agency to downgrade the country's debt rating to "selective default". This is a technical downgrade, but investors already believe that a default threatens the country in the next five years with a 90% probability, writes Bloomberg.

What happened. S&P has downgraded Argentina's foreign and local currency credit rating to "Selective Default" ("SD").

Quote. "The Argentine government unilaterally extended the maturities of short-term securities on August 28. According to our criteria, this represents a default," the report says. With the new terms going into effect immediately, S&P will roll back the long-term ratings to 'CCC-' and the short-term ratings to 'C' on August 30.

• Argentine Finance Minister Hernán Lacunza announced that the government would defer repayments of $7 billion of institutional investors, change "on a voluntary basis" the terms of repayments of $50 billion of debts to private investors, and begin negotiations with the IMF on the terms of a fresh $44 billion loan. thus reaching $101 billion.
• The Argentinean indices and pesos have been in free fall since the Aug. 11 presidential primaries, in which incumbent Macri lost in a landslide to centre-left candidate Alberto Fernandez. Since then, the peso has fallen by 20% against the dollar, and the country's foreign exchange reserves by almost $10 billion. Why investors are afraid of Fernandez, we explained here .

What's next?

The government's plan to defer payments will ease the situation in the short term, as the peso has already shown slightly higher. In the medium term, Argentina is facing a series of already real defaults: the government provides only a quarter of payments on external obligations and covering the budget deficit.