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Argentina blasts rating agencies

Oct. 17, 2012 at 4:12 PM   |   Comments

BUENOS AIRES, Oct. 17 (UPI) -- Argentina lashed out at international rating agencies for critical reports on the country's economy which it said were exploited by financial speculators.

Argentine Economy Minister Hernan Lorenzino likened the rating agencies to pirates and accused them of terrorism.

The credit rating agencies, he said, colluded which speculators to produce "terrorist reports in order to make some profit out of it."

Argentine pronouncements relate to its down payment on a Bonar X dollar bond for $200 million. Buenos Aires says crediting ratings reports on Argentina cast doubt on the country's ability to make timely repayments on the planned new bond issues.

The Argentine government is seeking to raise more than $1 billion in a debt sale from an existing Bonar X series initiated in 2007. The government is hoping to market the bonds with an attractive interest yield of up to 7 percent.

Argentina sparked controversy last week when the country's northeastern Chaco province surprised traders by settling its dollar debts in Argentine pesos. Chaco's action reignited speculation the Latin American country would have trouble repaying sovereign debts, including any repayments likely to fall due on new bond issues.

Argentina has singled out Moody's ratings agency for special criticism because of its last assessment of Argentina's financial outlook. There was no immediate reaction from Moody's to Lorenzino's comments.

Lorenzino attacked Moody's for a Monday rating action which, according to him, issued a negative outlook on the issue of bonds in Argentina after Chaco paid its dollar debts in pesos.

"We'd like to deny the statements issued by the credit rating agency since no regulations have been changed in the Argentine bonds market," Lorenzino said, referring to the peso transaction.

"Once again, a speculative attack mounted by a credit rating agency and some media groups is directed at us when we are about to meet some debt payments," he said.

He accused the international rating agencies of walking along with international speculators by setting "terrorist reports" intended to frighten investors.

"Credit rating agencies = speculators," Lorenzino declared. "They want to lower the bond price a day before the payment so they can make some profit out of it. An old pirate trick," the minister wrote on Twitter.

In earlier comments Lorenzino questioned the credit rating agencies' "behavior" and their use of financial analysis to develop "self-fulfilling prophecies."

The 2009 financial crisis and the current international financial crisis had shown the rating agencies' methods to be inadequate, he said.

Citing Argentina and Greece together as examples, he said Greece in 2009 had the investment grade but the rating agencies' downgrades intensified its difficulties.

In the case of Argentina, he said, "the process has been the other way round, for the last five years we've been rated as a country in crisis with a high debt risk."

"For the agencies, Argentina is constantly about to get into a crisis, but Argentina has grown for the last 10 years and fulfills its financial obligations," Lorenzino said.

International ratings agencies have also faced criticism in the European Union over their ratings actions in the eurozone, including Greece, Germany and Spain.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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