Moody’s changes the outlook for banks in Argentina to negative

The risk rating agency Moody’s changed the perspective of the banking system in Argentina to negative this Wednesday due to the environment of high inflation and economic deterioration in which financial entities operate.

As explained by the agency in a statement, the change in outlook from stable to negative in the Ca rating (highly speculative investments) for the Argentine banking system reflects the deterioration in operating conditions due to the instability of Argentina’s macroeconomic performance.

This scenario includes a significant reduction in the expected economic performance – with a probable contraction of GDP of 0.5% in 2023, according to Moody’s – and persistently high inflation, which already exceeds 100% year-on-year at the beginning of this year.

In addition, according to the rating agency, the large holdings of debt issued by the Treasury and by the Argentine Central Bank by banks expose them to financial conditions “more and more difficult” of the sovereign issuer.

“These challenges are partly offset by the banks’ relatively strong fundamentals, with sizeable capital buffers, historically high liquid asset holdings, and adequate profits.“, he pointed Moody’s.

Source: EFE