Credit rating agency Moody’s has elevated Argentina’s sovereign debt rating and revised its outlook on the nation from stable to positive, attributing this change to a reduction in default risk and “improving governance.” On Tuesday, the agency elevated the long-term local and foreign-currency issuer ratings of the government of Argentina from Caa1 to B3. Argentine Economic Policy Secretary José Luis Daza emphasised that the new rating corresponds to the B- rating from agencies Fitch and S&P, indicating that the three principal raters “are now aligned on a B- rating for over a decade.” He noted that “thousands” of institutional investment mandates necessitating ratings from two or three agencies, or reliant on an average rating, now possess the “green light” to invest in Argentina.
Moody’s said in a statement that the upgrade to the country’s rating reflects their assessment that Argentina’s default risk has “declined materially” as macroeconomic stabilization has advanced “beyond the initial adjustment phase” and into a “more durable improvement” in credit fundamentals, which they deemed “a sign of improving governance.” The agency stated “Sustained fiscal surpluses, declining inflation and continued economic liberalization strengthen policy credibility and reduce macroeconomic volatility.” It also explained that prospects for Argentina’s external position “have improved markedly” due to stronger export performance and rising foreign direct investment in the energy and mining sectors, along with enhanced access to external financing. “The positive outlook reflects our view that Argentina’s credit profile may strengthen further as structural improvements in external finances combine with ongoing macroeconomic stabilization,” they said.
While recognising the political risks that lie ahead of the 2027 presidential election, the agency noted that “the range of policy outcomes has narrowed relative to previous cycles, increasing the probability of policy continuity and sustained gains in external liquidity and debt payment capacity.” According to Moody’s, Argentina’s macroeconomic adjustment has “evolved into a more comprehensive normalization process,” underpinned by sustained fiscal surpluses and a “decisive shift” toward stabilizing economic and monetary policy. Deza celebrated Moody’s consideration that macroeconomic stability and fiscal discipline “have growing chances of lasting beyond this government.” The agency also elevated Argentina’s local currency country ceiling from B1 to Ba3.
The foreign currency country ceiling was also elevated from B2 to B1. “The three-notch gap between the local currency ceiling and the B3 sovereign rating balances the increasing predictability of government actions and institutions and a decreased footprint of the government in the economy and the financial system, against lingering political risks and slowly improving external imbalances,” Moody’s explained. Regarding the one-notch gap between the foreign currency ceiling and local currency ceiling, the agency said it “reflects improved policy effectiveness and relatively low external indebtedness, balanced by low capital account openness.” According to Deza, this will enable Argentine companies with better credit profiles to obtain higher ratings, “thereby reducing their financing costs and expanding their access to international markets.”