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Gabriel Torres, Moody's. The figures aren't so bad, it's the politics
Perfil
September 07, 2008

Torres. Confidence with reliable figures and less noise

By C.L.I

"It doesn't really change anything", answered Gabriel Torres, senior analyst and VP of Moody's to Perfil when asked about President Cristina de Kirchner's announcement to pay off the Paris Club. His diagnosis is critical, as it is the basis for Moody's decision to change its point of view concerning the likelihood of a default of public Argentine debt, which has an influence on investment decisions.

In August, Moody's reduced the outlook for the Argentine debt from "positive" to "stable", as inflation was "exacerbating political tensions" and "lack of credibility in official figures, which increases doubt as to the capacity and will of the Government to pay off its debts". Now, despite the Government's efforts to buy back debt and the announcement of the payment to the Paris Club, the panorama has not changed.

Perfil: How do you see the Government's announcement to pay the Paris Club?

GT: It's cautiously positive as it resolves a problem which the Government had and it's a sign of a will to pay off part of that debt. But it doesn't change much.

Perfil: What benefits will it bring Argentina?

GT: It will increase access to official loans, particularly export credit agencies in industrialized countries, such as the Exim Bank. But it won't change the issue of the placement of the debt because of the problem with the hold-outs.

Perfil: Will you consider reversing the outlook or qualification of Argentine debt?

GT: No. This doesn't reduce their debt drastically. So neither does it change its credit capacity. There are other issues such as inflation and the lack of political consensus in the country which must be resolved.

Perfil: What do you think of the bond buy-back?

GT: It is a positive sign that the problem is being recognized and a solution sought.

Perfil: How do you see the Government's financing needs for 2009?

GT: The numbers aren't so bad, what is limiting the country is political. Argentina has not solved the problem with the hold-outs and that is not so much money.

Perfil: What signs should Argentina give to recover market confidence?

GT: It should solve inflation, with an index that the market can believe in, negotiate with the hold.-outs and turn the volume of political noise down. The more boring a country's politics, the better its creditworthiness.