S&P slashes Mendoza

S&P said it downgraded the Argentine province of Mendoza’s long-term rating to CCC- from B-.

“Our CCC- ratings on Mendoza reflect our view that it’s facing a severe liquidity crunch, without access to funds to service its debt while undergoing debt restructuring. The ratings also incorporate the impact of Covid-19 on the provincial economy, which has exacerbated the already considerable economic and social strains in Argentina,” S&P said in a press release.

“The pandemic has ratcheted up pressure on the already weak provincial finances, leading to a sharp decrease in tax collection as the economy came to a halt and rising demands to raise spending to contain the spread of the virus. As a result, Mendoza is facing a severe liquidity crunch, lacking sufficient funding to service its debt in time and in full, and even facing concerns over its ability to fund the provincial payroll,” S&P said.

The outlook is negative.

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