Argentina’s bonds extended declines as S&P Global Ratings cut the South American nation’s foreign- and local-currency credit ratings to “selective default” after it said it would delay payments on short-term local debt, Bloomberg News reported. The government will postpone $7 billion of payments on short-term local notes held by institutional investors this year and will seek the “voluntary reprofiling“ of $50 billion of longer-term debt, Economy Minister Hernan Lacunza said on Wednesday. It will also start talks over repayments on $44 billion it has received from the IMF. While the plan could relieve short-term pressures, it raises the prospect of defaults further down the line, according to Credit Agricole SA. Argentina’s peso and bonds have tumbled after opposition leader Alberto Fernandez routed President Mauricio Macri, a market favorite, in an Aug. 11 primary vote. The peso is down more than 20 percent since then and bonds have hit record lows, with investors pricing in an over 90 percent chance of default in the next five years.
