Moody's cuts Argentina's foreign law bond ratings, cites default risk

NEW YORK, March 15 Fri Mar 15, 2013 1:02pm EDT

NEW YORK, March 15 (Reuters) - Moody's Investors Service on Friday cut the credit rating on Argentine sovereign debt governed by foreign law to Caa1, citing the increased risk of a default on these issues due to the ongoing U.S. legal case by holdout investors seeking payment.

Moody's said the move was made to differentiate these bonds from the rest of Argentina's sovereign debt. It affirmed Argentina's B3 issuer rating, which applies to bonds issued under local law.

In addition Moody's affirmed the Ca rating on the $6.3 billion of untendered debt from the 2005 and 2010 debt swaps that remain in default.

In 2002 Argentina defaulted on its sovereign debt after years of economic upheaval. A group of investors has held out from swapping defaulted debt and pursued full payment in U.S. courts.

The outlook on all these ratings is negative, Moody's said in its statement.

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