0120/2020 Overview Argentina September 7th 2020 Overview Argentina: risk assessment seen ome ing Petia amie comey ‘a a sora ry sear a ‘yao ce cee ccc 3 cee coe tings tec oe aon prant ch Repos bt bin be pe, = Download the numbers in Excel! Sovereign risk Sovereign risk is CC-rated. In August the government successfully restructured USS66bn in distressed external debt. The deal will not allow the sovereign to re to international capital markets any time soon, but it will set the stage for negotiations on a new lending arrangement with the IMF. The Economist Intelligence Unit believes that a new programme will come with relatively lenient conditions, but risks to this, benign outlook are significant, Currency risk Curreney risk is CCC-rated. Although peso volatility has been contained by tight curreney controls, depreciation pressures are likely to persist for as long as access to foreign capital remains weak. Despite a stabilisation of reserves in recent weeks, the ability of the Banco Central de la Repiblica Argentina (the central bank) to defend the currency is limited. Banking sector risk Banking sector risk is CCC-rated, Financial soundness indicators, although adequate, are set to worsen amid currency adjustment and economic recession. Argentina's history of financial and currency erises leaves the banking sector vulnerable to runs on deposits, springy ity an anette =e ee wae | Political risk Political risk is Berated. The president, Alberto Femande7, will face a challenging political landscape as he balances the demands of the competing factions of the ruling left-wing Frente de Todos Peronist coalition. The risk of social unrest and political instability will also be high amid the economic crisis ‘country su. comfaticle.aspx2artclid=16101615448 Country=Argentina8topic=RiskS.sublopic=Cred trisk&subsubtopic=Overviow 10120/2020 Overview Economic structure risk Economic structure risk is CC rated. Despite the latest debt restructuring, the public debt burden will remain elevated well into the medium term, weighing on the rating. Commodity dependence, high inflation and the weak state of the public finances also inctease the economy's exposure to shocks ‘country su. comfaticle.aspx2artclid=16101615448 Country=Argentina8topic=RiskS.sublopic=Cred trisk&subsubtopic=Overviow 22