Moody’s rates Buenos Aires notes Caa2

Moody’s Investors Service said it assigned Caa2 global-scale foreign-currency ratings to the senior unsecured notes to be issued by the Province of Buenos Aires for up to $1.033 billion.

The ratings are in line with the province’s long-term foreign-currency issuer ratings, which have a negative outlook, Moody’s said.

On June 2, the province priced about $500 million of these new notes at a 9.95% coupon rate. The bond issuance was authorized by law, the agency said.

The proceeds will be used to prepay outstanding provincial debt, as well as fund infrastructure and social projects during 2015, Moody’s said.

The province also launched a bond exchange offer for up to $500 million under a $1.05 billion 11.75% coupon rate notes due in October 2015.

After the settlement of the first tranche of these new notes for $500 million and conclusion of the exchange, both tranches will be consolidated and will form a single bond series of up to $1.033 billion, Moody’s said.

The bonds, which constitute direct, general, unconditional and unsubordinated obligations of the province, will be denominated and payable in U.S. dollars with a maturity of six years, the agency said.

Given the negative outlook on the ratings, Moody’s said it does not expect upward pressures in the province in the near- to medium-term.

But a change in Argentina’s sovereign outlook back to stable could lead to a change in the outlook back to stable for Buenos Aires, the agency said.

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