Last week, Argentina decreed that certain nonfinancial public-sector entities (predominantly the social security institute, ANSES) must exchange or sell their holdings of dollar-denominated global- and local-law bonds issued in the 2020 restructuring for local-law peso-denominated debt. Since these bonds are intra-government holdings, we do not consider the transaction tantamount to default under our sovereign methodology (which focuses on commercial debt), but the proposed transaction suggests heightened risks and vulnerabilities surrounding repayment of foreign currency commercial debt. We lowered our long-term foreign currency sovereign credit rating on Argentina to 'CCC-' from 'CCC+' and affirmed our 'CCC-' long-term local currency rating. The negative outlook on the long-term ratings reflects risks surrounding pronounced economic imbalances and policy uncertainties before and after the 2023
