Argentina's economy minister accused credit ratings agencies on Tuesday of releasing "terrorist" reports and acting like "pirates" after Moody's Investors Service said Chaco province defaulted last week when it paid dollar debts in pesos.
The central bank refused to let Chaco buy dollars on the local foreign exchange market due to currency controls, so the province repaid creditors about $260,000 (U.S.) in pesos on dollar-denominated bonds issued under local legislation.
Leftist President Cristina Fernandez has limited access to dollars in the past year to stem capital flight but this was the first time a province was unable to buy greenbacks due to the restrictions.
In a report titled "Province's Default Is Credit Negative for All Foreign Currency Debt from Argentina," Moody's said Chaco's move reflected "a broader foreign exchange shortage within the country and an increasingly interventionist government."
Moody's did not change its B3 rating on Argentine debt, which has had a negative outlook since September.
Economy Minister Hernan Lorenzino responded via Twitter that "the ratings agencies go hand in hand with speculators. They issue terrorist reports that, without changing the rating, scare investors."
Mr. Lorenzino accused Moody's of trying to depress prices ahead of Wednesday's scheduled $200-million interest payment on the country's Bonar X bond.
"They want to lower bond prices one day before the interest payment to make a profit – an old pirate's trick," he tweeted.
Argentine officials have long criticized ratings agencies, saying they impose discredited orthodox economic thinking on debtors. Ms. Fernandez's government shuns such thinking and spends heavily to stoke demand, taps international reserves to pay debt and uses import and currency controls to sustain its policies.
The South American country, Latin America's third-largest economy, has been virtually shut out of international credit markets since it staged the world's biggest-ever sovereign debt default at the height of a 2001-02 economic crisis.
National and provincial bond prices sank last week in the wake of Chaco's decision to pay its dollar obligations in pesos.
The central bank said the restrictions only affect a small amount of dollar debt issued under Argentine law. It said debtors who issued bonds under foreign legislation would be able to buy foreign currency to service that debt.