Business News Americas
December 13, 2012
Argentina's federal government could next year resort to paying dollar-denominated debt issued under local law in pesos if its foreign currency reserves fall to "dangerously low levels," said Capital Economics in a report on the risks related to Argentine debt.
Capital Economics estimates that Argentina's federal government has around US$30bn in performing dollar debt that has been issued under domestic law.
The trend already began this year when at the beginning of October Chaco province made a payment in pesos on dollar-denominated bonds issued under local law. This prompted ratings agency Moody's to downgrade its ratings on the province as well as on several other provinces due to the risks faced by the provinces in accessing foreign currency to pay their foreign currency-denominated debts.