S&P downgrades Mendoza

Standard & Poor’s said it lowered its local-currency ratings on the province of Mendoza to CCC- from CCC+.

The agency also said it removed the ratings from CreditWatch with negative implications where it was placed in June.

S&P also said it affirmed our ‘CCC-’ foreign currency rating on the province.

The outlook is negative.

The downgrade on the province of Mendoza follows a review of the cross-default clauses included in some of the province’s debt obligations in a scenario of worsening macroeconomic conditions and limited external financing after the agency lowered the ratings on Argentina to selective default at the end of July, S&P said.

The agency said it expects the sovereign’s selective default to weaken the overall macroeconomic environment in Argentina through lower economic growth, the closing of external debt markets, likely further exchange-rate devaluation and higher inflation.

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