Argentina Cut Deeper Into Junk by Fitch as Default Fears Mount By Bloomberg

(Bloomberg) — Argentina’s credit rating slid deeper into junk territory on Friday after Fitch Ratings lowered its assessment, citing President Mauricio Macri’s landslide defeat in Sunday’s primary election.

The South American nation’s long-term issuer rating was lowered by three notches to CCC, signifying a “substantial” risk of default and putting Argentina on par with Zambia and the Republic of Congo.

Fitch was the first of the three main rating firms to take action after the vote and ensuing market sell-off. S&P Global Ratings and Moody’s Investors Service rate the nation’s notes at five levels below investment grade.

Fitch’s downgrade reflects “an expected deterioration in the macroeconomic environment that increases the likelihood of a sovereign default or restructuring of some kind,” analyst Todd Martinez wrote in a statement.

The move comes five days after opposition candidate Alberto Fernandez’s surprise win in the primary. That spurred a sell-off across Argentine markets as the peso fell to a record low, the benchmark equity gauge suffered one of the worst daily routs in 70 years and the yield on the nation’s century bonds spiked to an all-time high.