Fitch downgraded Argentina to CCC from B on Friday afternoon capping a volatile week for the sovereign following President Mauricio Macri's surprise upset in the primary election.
The agency took action following a severe tightening of financing conditions and an expected deterioration in the macroeconomic environment that increases the chance of a default, or a restructuring, it said in a report.
"The primary election results point to heightened risks of policy discontinuity following the October 2019 general elections," it said.
Fallout from the election results has soured sentiment on the country, which this week saw a precipitous depreciation in its local currency and a widening of sovereign debt spreads.
"It is surprising why Fitch would move before the election," said a senior banker.
"I don't think it has any substantial impact, but it surprises me that they didn't wait," said the banker on the timing of the cut.
President Macri, long seen as a the market-friendly candidate by investors, fell behind Alberto Fernandez, whose running mate is former President Cristina Fernandez de Kirchner.
Macri lost by an unexpected margin of around 15 percentage points, a large margin unexpected by a large part of the market.
Given the country's turbulent week, some were not surprised by the ratings cut, but think it will have little impact.
"The ratings move means nothing because the implied default probability in Argentina is already extremely high," said a head of research at a New York-based investment bank.
The rating move has had little impact on secondary bond prices as the market was largely closed by the time Fitch announced the downgrade.
But traders think prices could take a leg down on Monday after a slight recovery in prices this week.
The sovereign's 2028 and 2048 bonds were trading at a dollar price of around 52-54 earlier today, according to a trader.