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Rating Action:

Moody's upgrades the global ratings of Argentinean provinces and municipalities

 The document has been translated in other languages

21 Apr 2016

Buenos Aires City, April 21, 2016 -- Moody's Latin America Agente de Calificación de Riesgo (Moody's) has today upgraded the global scale issuer and debt ratings in both -local and foreign currency- of all of its rated Argentine provinces and municipalities. Additionally, Moody's changed the outlooks to stable from positive except in the cases of the Provinces of Chaco and Formosa, where the outlooks remain positive. In the same rating action Moody's placed the national scale ratings of all its rated provinces and municipalities on review with direction uncertain. This rating action follows Moody's Investors Service upgrade of Argentina's Sovereign bond ratings to B3/ stable from Caa1/positive, on 15 April 2016.

For more information, please see separate press release titled "Moody's upgrades Argentina's issuer rating to B3 with a stable outlook", https://www.moodys.com/research/Moodys-upgrades-Argentinas-issuer-rating-to-B3-with-a-stable--PR_347279.

RATINGS RATIONALE

GLOBAL SCALE RATINGS AND OUTLOOKS

The ratings upgrade on the global scale in both local and foreign currency follows a similar rating action on Argentina's sovereign bonds and issuer ratings --both in local and in foreign currency- and reflects the very close economic and financial linkages that exist between Argentina´s sovereign and sub-sovereign governments. While the idiosyncratic risks associated with each of the sub-sovereign entities varies, the relatively low sovereign rating and the inability of a sub-sovereign entity to be rated higher than the sovereign given the linkages noted above results in a compression of ratings on the provinces and municipalities.

The stable outlooks on all but the Provinces of Chaco and Formosa reflect the stable outlook on the sovereign ratings and the close relationship described above. The positive outlooks on the ratings of the Provinces of Chaco and Formosa reflect our view that an improving trend in their respective financial metrics could, if continued, lead to an upgrade and alignment of their ratings with their peers.

NATIONAL SCALE RATINGS AND OUTLOOKS

The national scale ratings (NSRs) of all the rated sub-sovereigns are being placed under review, direction uncertain, pending a potential revision of Argentina's NSR map. Following the recent upgrade of Argentina's sovereign rating and the increase of its local currency country ceiling to Ba3 from B1, the current mapping of global scale ratings to national scale ratings may no longer adequately serve one of its intended purposes, which is to provide greater credit differentiation among issuers in Argentina than is possible on the global rating scale. As a result, the lowest global scale rating that maps to Aaa.ar is likely to rise to Ba3 in line with the new country ceiling, and the new map is likely to associate lower NSRs with a given global scale rating than does the current map. Assuming the map is revised in line with current expectations, we would anticipate that the large majority of NSRs being placed under review will be confirmed at their current levels when the reviews conclude, though a small number may be raised or lowered.

ISSUERS AND RATINGS AFFECTED

The specific rating actions taken today are described below:

1) Moody´s upgraded the Global Scale local and foreign currency issuer and debt ratings of the following issuers, restoring their outlooks to stable. Their National Scale issuer and debt ratings were placed on review with direction uncertain.

- Province of Buenos Aires: foreign and local currency issuer and debt ratings upgraded to B3/(P)B3/B3 from Caa1/(P)Caa1/Caa2 (on Global Scale local/foreign currency respectively). The province´s Baa3.ar/B1.ar local and foreign currency issuer and debt ratings on Argentina's national scale were placed on review with direction uncertain.

- Province of Córdoba: foreign and local currency issuer and debt ratings upgraded to B3/B3 from Caa1/Caa2 (on Global Scale local/foreign currency respectively). The province´s Baa3.ar/B1.ar local and foreign currency issuer and debt ratings on Argentina's national scale were placed on review with direction uncertain.

- Province of Mendoza: foreign and local currency issuer and debt ratings upgraded to B3/(P)B3/B3 from Caa1/(P)Caa1/Caa2 (on Global Scale local/foreign currency respectively). The province´s Baa3.ar/B1.ar local and foreign currency issuer and debt ratings on Argentina's national scale were placed on review with direction uncertain.

- City of Buenos Aires: foreign and local currency debt ratings upgraded to B3/(P)B3/(P)B3 from Caa1/(P)Caa1/(P)Caa2 (on Global Scale local/foreign currency respectively). The city´s Baa1.ar/B1.ar local and foreign currency debt ratings on Argentina's national scale were placed on review with direction uncertain.

2) Moody´s upgraded the Global Scale local currency issuer and debt ratings of the following issuers, restoring their outlooks to stable. Their National Scale issuer and debt ratings were placed on review with direction uncertain.

- Province of Chubut: local currency issuer and debt ratings upgraded to B3 from Caa1 on Global Scale. The Global Scale local currency debt ratings of BODIC 1 and BODIC 2 Notes were also upgraded to B3 from Caa1. The province´s Baa2.ar/Baa1.ar local currency issuer and debt ratings and BODIC 1 and BODIC 2's local currency debt ratings on Argentina's national scale were placed on review with direction uncertain.

- Municipality of Córdoba: local currency issuer and debt ratings upgraded to B3/(P)B3 from Caa1/(P)Caa1 on Global Scale. The Global Scale local currency debt ratings of Series 1 and Series 2 Bonds were also upgraded to B3 from Caa1. The city´s Baa3.ar local currency issuer and debt ratings and Series 1 and Series 2´s Baa2.ar local currency debt ratings on Argentina's national scale were placed on review with direction uncertain.

- Municipality of Río Cuarto: local currency issuer and debt ratings upgraded to B3/(P)B3 from Caa1/(P)Caa1 on Global Scale. The city´s Ba1.ar local issuer and debt ratings on Argentina's national scale were placed on review with direction uncertain.

3) Moody´s upgraded the Global Scale local currency issuer and debt ratings of the Provinces of Chaco and Formosa maintaining their current positive outlooks. Their National Scale issuer and debt ratings were placed on review with direction uncertain.

- Province of Chaco: local currency issuer and debt ratings upgraded to Caa1 from Caa2 on Global Scale. The province´s Ba3.ar local currency issuer and debt ratings on Argentina's national scale were placed on review with direction uncertain.

- Province of Formosa: local currency issuer and debt ratings upgraded to Caa1 from Caa2 on Global Scale. The province´s Ba3.ar local currency issuer and debt ratings on Argentina's national scale were placed on review with direction uncertain.

WHAT COULD CHANGE THE RATING UP/DOWN

Given the strong macroeconomic and financial linkages between the sovereign and sub-sovereign entities, an upgrade or an outlook change to positive of Argentina´s sovereign bonds ratings could lead to an upgrade or to an outlook change of the sub-sovereign ratings. Regarding the Provinces of Chaco and Formosa, further improvements in their idiosyncratic risk characteristics --mainly in the growth of their own-source revenues-- could also exert upward pressure for these two provinces in particular.

Conversely, a downgrade in Argentina's bond ratings or outlook change to negative and/or deterioration in idiosyncratic risk profiles arising in the rated issuers could exert downward pressure on the ratings and could translate into a downgrade.

The principal methodology used in these ratings was Regional and Local Governments published in January 2013. Please see the Ratings Methodologies page on www.moodys.com.ar for a copy of this methodology.

Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in June 2014 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.ar.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

For issuers domiciled in Argentina, the regulatory report related to this rating action is available on www.moodys.com.ar.

Please see www.moodys.com.ar for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com.ar for additional regulatory disclosures for each credit rating.

Alejandro Pavlov
Vice President - Senior Analyst
Sub-Sovereign Group
Moody's Latin America ACR
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 5129 2600

David Rubinoff
MD - Sub-Sovereigns
Sub-Sovereign Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's Latin America ACR
Ing. Butty 240
16th Floor
Buenos Aires City C1001AFB
Argentina
JOURNALISTS: (800) 666 -3506
SUBSCRIBERS: (5411) 5129 2600
Moody's upgrades the global ratings of Argentinean provinces and municipalities

No Related Data.
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