Moodys upgrades Buenos Aires Citys debt rating to AAA, highest category

Credit rating agency Moody’s upgraded Buenos Aires City’s debt rating to “AAA,” the only Argentine region included in the agency’s top category. According to the report published on Tuesday, the upgrade was based on the city’ fiscal and financial performance, as well as improvements in its maturity profile. City Finance and Public Credit Minister Gustavo Arengo said that the credit rating upgrade was the “result of having orderly public accounts and fiscal discipline.” “This allows us to achieve a solid credit reputation, an essential condition for accessing low-cost financing, thereby increasing our investment capacity,” he added. For the city, this allows them to access foreign financing at lower interest rates. However, it should be noted that its bonds are also tied to Argentina’s sovereign debt rating. For reference, the highest rating Moody’s assigns to debt is AAA, followed by Aa, which is further divided into subcategories: Aa1, Aa2, and Aa3. This process is also repeated for the A, Baa, Ba, and finally Caa categories.  Argentina’s sovereign debt is rated Caa1 — indicating a very high risk of default — but with a stable outlook. Moody’s Report Moody’s report noted that Buenos Aires’ ratings reflect its “credit resilience, evidenced by its ability to navigate challenging environments in recent years.”  Prior to the arrival of President Javier Milei, they explained, local and regional governments faced a “challenging” economic and social context due to surging inflation, a shortage of international reserves, and political uncertainty.  With Milei’s arrival, it was noted that “structural changes occurred” that have impacted regional governments in several ways.  In 2025, regional governments experienced “a notable deterioration in their fiscal metrics, possibly due to difficulties in the recovery of economic activity.”  In the case of Buenos Aires, they also noted that this deterioration was a consequence of delays in non-automatic transfers by the national government. They added, however, that the two recently reached an agreement to settle the outstanding balance from July 2025 to March 2026. “In 2026, our baseline scenario anticipates a gradual normalization of key economic variables,” Moody’s added. Pablo Repetto, head of research at brokerage firm Aurum Valores, told the Herald that this improvement in Buenos Aires’ situation is linked to the fact that a few weeks ago it issued a 10-year bond for US$500 million. This allowed it to “pay off debt maturing in the very short term.” “The maturity horizon for the [city’s] debt has become much clearer,” he commented. He also noted that there are historical reasons why BA is the region with the highest credit rating in Argentina, even well above the level of Argentina’s sovereign debt.  “[They were] the only debt issuer that did not default in 2001–2002, when all of Argentina’s debt did,” he explained.  Differences with the country’s debt Repetto said that unless the Milei administration “does what Buenos Aires did,” he doesn’t see the city’s ratings improvement impacting the country’s sovereign debt. He noted that the criticism leveled at the Milei administration is that it is not clearing debt maturities for the coming years.  “Even if you have to pay a slightly longer-term and higher rate, you clean up the maturity profile, and that alone will improve your rating and payment perception,” he added. In 2027, Argentina will face payments of more than US$8.5 billion in sovereign bonds. According to data from GMA Capital, this is more than double than what it has to pay this year. Last month, Moody’s itself acknowledged that it does not foresee an immediate upgrade of Argentina’s sovereign debt rating.  It cited the persistence of political risk ahead of next year’s presidential elections and the fact that it is still awaiting a program detailing how the country will meet its substantial 2027 financial commitments.