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Argentine officials are starting to prepare the country's return to international bond markets. Their hope is that markets keep moving in their favor so they can sell the bonds by the start of next year, according to people familiar with the matter who asked not to be identified because the discussions are private.
Whether they ultimately do or not, that they're even considering the possibility underscores the magnitude of the country's turnaround over the past two months.
In September, panic swept through Argentine markets as investors feared that President Javier Milei's fiscal-austerity program would be undone by an increasingly emboldened opposition in Congress. The peso plummeted and the country's dollar bond yields skyrocketed over 17%, prompting the Trump administration to rush emergency aid to Milei to curb the selloff.
That gambit worked. Markets first stabilized, then rallied sharply when Milei's party won more congressional seats in a late October vote than pundits expected. Yields are now down to close to 10%, or about six percentage points above benchmark US Treasuries. That puts them near the levels that Economy Minister Luis Caputo has signaled to investors he'd be willing to sell bonds at, according to people familiar with the matter.
Argentina has been locked out of the market since it defaulted for the third time this century during the pandemic. Milei, a libertarian economist, has made regaining access to debt investors by early 2026 a key goal since he took office in 2023. It would also give the country an infusion of dollars it could use to pay back foreign debts — it has about $4.5 billion due in January, and a similar amount for July — and rebuild its depleted hard-currency reserves.
"We're probably not too far off" from Argentina returning to global markets, said Gorky Urquieta, co-head of emerging-market debt at Neuberger Berman. "A yield below 10% is the magic number."
A new bond would likely be just one step in a series of debt operations, according to people with knowledge of the discussions. There's talks with several banks around options that could help push spreads lower and allow Argentina to tap markets.
Ideas include a repo operation that would be used to give investors a cash sweetener as part of a debt swap, the people said. A liability management transaction with a repo to get up to $5 billion to cover January amortizations using importer bonds as collateral and a debt-for-education swap, similar to Ecuador's nature swap, are also among the options.
"Since the election, we are the closest we've ever been to having access to markets," Caputo said at an event in Buenos Aires on Wednesday, adding that the government is "very confident" country risk will drop in coming weeks.
Caputo — who last month told investors Argentina planned to buy back bonds due in 2029 and 2030 — said Argentina has also received offers from banks worth between $6 billion and $7 billion and is evaluating how much to borrow to make sure its reserves don't drop due to the January debt payments.
Argentina could go to markets now — especially given the never-ending demand for emerging-market high-yielding assets. But the government is waiting for a compression of about 100 to 150 basis points in the yield curve, people familiar with the plans said, for costs to fall closer to the 7% to 8% the nation's biggest companies are paying.
The approval of labor and tax reforms by the new Congress, which begins on Dec. 10 with Milei's libertarian party as the biggest bloc in the lower house, could be the trigger, the people added.
Argentina "will come to market," said Pramol Dhawan, head of emerging markets portfolio management at Pacific Investment Management Co. It's "likely going to be a next-year issue."
The appetite for Argentine debt has been evident in the past few weeks. Companies and provinces have sold more than $4 billion in dollar bonds since the Oct. 26 election, compared to just $130 million in the three months leading up to the vote, data compiled by Bloomberg show.
And there's more on the way. Oil and gas company Vista Energy is looking to tap markets on Wednesday, and virtually every province is said to be considering issuing soon. Santa Fe province is holding investor meetings ahead of a planned debt sale, and Chubut is also said to be working on a deal. If Argentina successfully clears its 2029 and 2030 bonds, even riskier names like Chaco could come to market, the person added.
Caputo's plans to sell new debt, telegraphed early last year, were always met with some skepticism. At the time, some Argentine securities were yielding around 20% when measuring yield-to-worst.
And even amid the renewed optimism, doubts persist. Argentina, some analysts say, still has to boost dollar reserves — for which it needs to change the foreign-exchange regime Caputo and Milei have vowed to keep.
Barclays' economist Ivan Stambulsky and strategist Jason Keene said in a report this week that even if the country manages a repo to cover January payments, does a tender for bonds due in 2029 and 2030 and regains market access, it still needs "sizable" dollar purchases.
"A meaningful liquidity improvement requires aggressive dollar purchases, which we think are unlikely under this FX regime," they wrote.
The last time Argentina made a comeback to global credit markets, it did so with a bang. The country sold $16.5 billion in bonds, setting a single-day record for a developing country. Investors put in bids for $68.6 billion of debt, and yields came in at less than similarly-rated securities paid.
A dozen other offerings would follow, including a 100-year bond, before it would default again — for the ninth time since its independence in 1816.
--With assistance from Manuela Tobias, David Feliba, Ignacio Olivera Doll and Stephen Wicary.
(Updates with comments from Caputo in ninth, tenth paragraphs)
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