Argentine debt is rated because it was to Argentina's advantage. Rating agencies do not rate most debt for free; they charge the borrower to initiate a rating and they charge for ongoing rating service. Debt rating is a time-consuming, elaborate, highly involved process.
Argentina issued dollar denominated, rated debt for three reasons - all of them to Argentina's advantage. First, by issuing dollar debt, Argentina widened the pool of potential buyers significantly, thereby garnering a lower interest rate. Second, by issuing debt in the US, specifically New York State, Argentina garnered a lower interest rate, through buyer confidence that their rights would be honored in a court of law. Third, by getting the debt rated by at least 2 of the three big credit raters, Argentina garnered a lower interest rate.
Notice that all three choices, made by Argentina, were to Argentina's economic advantage: a lower interest rate. Issuance of debt in Argentine pesos, under Argentine law, and unrated, would have gone nowhere. No one would have bought such bonds.
Argentina mostly operates domestically in a fantasy world. Crimes are not punished, lack of initiative is rewarded, workers would rather strike than work. When Argentina issues debt to international investors, with a rating, under US law, it plays in the real world. Mistakes are punished. Dishonesty produces alienation. Unfulfilled promises are expensive.
When Argentina, or any debtor, issues bonds, it signs an indenture. This is a legal contract outlining each party's rights and serves as a promise to pay. Breach of the indenture is just like breaching any other contract. For those who lament this process, I would suggest they reflect on their own personal history and consider a time when someone broke a financial promise to their detriment. It is not fun, it is usually expensive and it often produces considerable emotional angst. Argentina is headed for a debt default, which means a breach of its promise to pay those who lent it money. It is too simplistic to think of counterparties as "Wall Street sharks." The institutions that lent Argentina money represent thousands of people, many of them retirees, retail investors, mom and pops. An Argentine debt default will economically harm many innocent investors who entrusted their money (mostly indirectly) to Argentina. Just as if you lent money to a friend who refuses to pay you back.
Fitch, the agency that downgraded Argentine sovereign debt to the same level as Zambia, is acting anticipatorily. Financial markets are forward looking, they assimilate all available information to create a future outlook. Argentina is a far riskier investment after election results last Sunday. Argentina must pay for its increased risk profile. This is the way of the developed world.
