Fitch cut its long-term rating for Argentina to ‘CC’ from ‘B’, a downgrade of five notches. It also slashed its short-term rating from ‘B’ to ‘C’, which is one step above default, the Telegraph reports.

US judge Thomas Griesa of Manhattan federal court last week ordered Argentina to set aside $1.3bn for certain bond investors by 15 December.

Those investors do not want to continue following a debt restructure plan that came after an Argentine default in 2002, according to the Telegraph.

Argentine politicians have attacked the ruling, arguing it threatens the success of debt relief that enabled the country to grow again.

They are also concerned if Argentina is forced to pay in full, other holders of debt totaling more than $11bn will also demand immediate payment.

Besides the court case, Fitch cited a “tense and polarized political climate” and public dissatisfaction with high inflation, weak infrastructure and currency, as reasons for the downgrade. It highlighted Argentina’s economy has slowed sharply this year.

Currently, S&P has a rating of ‘B-‘ for Argentina, while Moody’s rates the country at ‘B3 negative’. For both ratings agencies, this is five steps above default.