Moody's upgrades Argentina, aligning top three agencies for first time in decade

Moody's raised Argentina's long-term sovereign credit rating to B3 from Caa1 on July 21 with a positive outlook. The move follows similar actions by Fitch and S&P in May and June, aligning the three major agencies at B- for the first time in more than ten years.

The alignment carries immediate mechanical benefits for sovereign bond flows. "The move gives a green light to institutional investors whose mandates require ratings from two or three agencies or that rely on an average score," said Secretary of Economic Policy José Luis Daza. Markets reacted modestly, with JPMorgan's country-risk index falling 11 points to 410 basis points, while New York-listed bank stocks like Banco Supervielle and Grupo Financiero Galicia climbed over 3%.

Underpinning the upgrade is a shift in Argentina's macroeconomic trajectory. Moody's cited sustained fiscal surpluses, decelerating inflation and a stronger external position fueled by energy and mining exports. The agency forecasts growth of 3.4% in 2026 and 3.5% in 2027, driven largely by infrastructure and hydrocarbon investments linked to the Vaca Muerta shale formation.

A key pillar of this growth is the government's Incentive Regime for Large Investments (RIGI), which has secured a project pipeline worth $141.7bn, equivalent to roughly 20% of GDP. Of that total, $45bn is already under construction. However, Moody's cautioned that Argentina must maintain its macroeconomic adjustment until these projects come on stream from 2027 onward, noting that current external buffers remain thin.

That 2027 timeline is critical because it marks a major foreign-currency debt maturity. Argentina faces more than $32 billion in principal and interest payments that year. Economy Minister Luis Caputo has stated the government plans to cover these obligations through multilateral loans, privatisation proceeds and local bond issuance, deliberately avoiding a return to international bond markets at present.

The 2027 general election presents the primary structural risk to this timeline. Moody's noted that while the range of likely policy outcomes has narrowed, political risk "nonetheless remains a key constraint on the rating." A shift in government could reverse economic liberalisation and reintroduce market distortions.

IMF Managing Director Kristalina Georgieva will visit Argentina next