Standard & Poor's Ratings Services on Tuesday lowered its long-term foreign currency rating on Argentina to "CCC-" from "CCC+." The ratings agency cited a higher risk of default on Argentina's foreign currency debt.
But Argentina's Merval stock index, which had plunged 10 percent after Monday's court decision, rebounded Tuesday and closed up 3.75 percent on hopes the government would announce a solution.
Daniel Kerner, an analyst at Eurasia Group, said the debt swap announced by Kicillof was probably meant to strengthen Argentina's position in negotiations. But Kerner said a new debt swap would have to be agreed on quickly, or Argentina would risk missing a June 30 deadline for making payments on the existing bonds and falling in to default.
Still, he cautioned in an email statement that while Argentina wants to negotiate, it should be recognized that "the government is willing to default and has limits as to how much they can concede."
Associated Press writers Almudena Calatrava in Buenos Aires and Luis Andres Henao in Santiago, Chile, contributed to this report.
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