BUENOS AIRES, Argentina (AP) 鈥� The libertarian government of announced Friday it would issue a dollar bond for the first time in nearly eight years, as the cash-strapped country seeks a return to international markets and faces an enormous sum of debt due in the coming months.
The dollar-denominated sovereign bond, issued under Argentine law and targeted at foreign and local investors, has an interest rate, or coupon, of 6.5% and matures in November 2029, the Economy Ministry said, without offering details on the size of the offering.
Analysts say the bond auction signals in President Milei’s reforms after his party’s reassured bondholders that his government would be able to pay them back.
鈥淚t shows they are taking steps 鈥� slowly 鈥� toward normalizing the market and reducing dependence on international reserves, which is a big concern,鈥� said Fernando Marull, an Argentine economist.
鈥淚deally, debt should be paid with refinancing, not with scarce reserves. It鈥檚 like going to a bank and refinancing your loan instead of paying the whole thing in cash from your pocket. That’s why this is so important.”
Economy Minister Luis Caputo said the money would be crucial for settling part of the $4.2 billion in debt that鈥檚 coming due on Jan. 9 without tapping reserves. Because the bond won鈥檛 be issued under foreign law, he said, it won鈥檛 need congressional approval.
鈥淭he reopening of foreign currency debt markets will expand the Treasury鈥檚 options regarding the instruments available for debt management,” Caputo wrote on social media, attributing the move to Milei’s success in and that fenced off its debt markets.
Regaining access to international borrowing markets has been one of Milei’s goals since the in late 2023 on a bid to , stabilize Argentina鈥檚 troubled economy and reverse years of hefty public spending under .
Chronic economic crises have led Argentina to default on its debt nine times, . As a result, high borrowing costs and have left the country unable to take on debt abroad for most of the past two decades.
Without tapping global capital markets 鈥� which is how many governments around the world borrow or roll over debts 鈥� Argentina will struggle to expand its economy, and to repay the more than $40 billion it owes the .
Earlier this year, Caputo secured a to help Milei press ahead with fiscal reforms. To unlock successive tranches of funds, Milei’s government committed to building up its net hard-currency reserves to around $5 billion by the year’s end.
IMF spokesperson Julie Kozack told reporters on Thursday that 鈥渕eeting the end-of-year reserve target will be challenging” for Argentina. Warning that Milei鈥檚 current exchange rate policy of propping up the peso slowed reserve accumulation, she added:
鈥淲e continue to advocate that the authorities should use the window of opportunity to implement a consistent and robust monetary and foreign exchange framework to help support the accumulation of reserves.鈥�
Milei has diverted billions of dollars from central bank coffers to strengthen the depreciating Argentine peso in recent months.
That strategy was pushed to the extreme as doubts about the trajectory of Milei’s harsh austerity plan . With the official rate of the peso crashing against the dollar, stepped in to save his with a .
While the electoral win and vindicated Trump, unease remains that nothing can stop Milei from burning through foreign reserves again if he depends on a strong peso to fight inflation 鈥� not even this bond auction, which experts say is less attractive to foreign investors for being issued under local law.
鈥淚 don鈥檛 think this represents a return to international markets,鈥� said Juan Battaglia, chief economist at Cucchiara, a stock brokerage in Buenos Aires.
鈥淭he government has made significant progress in normalizing the financial account, but there is still a long way to go.鈥�
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