Cavallo has urged investors - mainly local insurance firms, pension funds and banks - to accept the terms or risk outright default on £132 billion in debt.
Fitch said that investors were "under duress" to accept the terms, and downgraded Argentina's sovereign long-term foreign and local currency ratings to 'C' - indicating an imminent default. The ratings remain on 'rating watch negative'. "Argentina's issuer rating will be downgraded to default status once the exchange is effected," said Fitch. The agency added that debt that is not part of the exchange is not technically in default and will remain at 'CC'.
Fitch also stated that the plans to reduce Argentina's debt servicing costs by $4 billion would "fall short of that required to meet the zero deficit objective and place public finances on a sustainable path necessary to reactivate growth and restore confidence".