Argentina is set to make a major payment on its dollar bonds this week, pulling off a feat few investors thought possible while the country refuses to tap global debt markets.
The government says it has already secured the funds needed to cover the US$4.3-billion semi-annual obligation, split between principal and interest on its foreign-currency bonds. It has also identified further financing sources that eliminate the need to tap international debt markets for the rest of President Javier Milei’s term, which runs through the end of 2027.
Investors had urged Economy Minister Luis Caputo to seize a window of opportunity to raise capital before the war in the Middle East rattled markets. Instead, the government held off, arguing borrowing costs remained too high. On Monday, Caputo doubled down, unveiling a financing plan that excludes international debt issuance this year, relying instead on local dollar bonds, multilateral-backed loans and other lower-cost sources.
“Going to the market is just another option, not an objective,” Caputo told reporters. The government’s goal, he said, is to refinance debt as cheaply as possible. Officials added that the Treasury already holds about US$4 billion in dollar deposits for this week’s payment and that proceeds from multilateral-backed financing would arrive before the bonds come due on Thursday.
This will be Argentina’s second major debt repayment for 2026, after the South American nation paid a similar sum to bondholders at the start of the year. Since March, the Treasury has raised roughly $4 billion through sales of bonares, or locally issued dollar-denominated bonds. The notes mature in 2027 and 2028, at yields averaging 6.9 percent – well below the roughly 8.6 percent investors estimate Argentina would currently pay abroad.
On Monday, Caputo announced plans to raise another US$2 billion through similar domestic placements by year-end, while also relying on multilateral-backed loans with interest rates of about six percent to seven percent. On Wednesday, the government formalized part of that strategy by confirming up to US$3.2 billion in loans from BBVA, Santander and Deutsche Bank, backed by guarantees from the World Bank and the Inter-American Development Bank.
While the bedrock of Caputo’s current strategy is the domestic market, it marks a sharp shift from the spree of international bond sales during his time under former president Mauricio Macri.
In the months leading up to this week’s key deadline, many investors insisted Argentina would need to sell global bonds to meet the bulk of its 2027 payments.
“Investors were very vocal at the beginning of the year about the need for Argentina to come to markets, much like Ecuador did,” said Gustavo Medeiros, head of research at Ashmore Group, pointing to widely-held concerns about Argentina’s international reserve levels. However, the government has been very successful in accumulating dollars this year, he added.
Many investors still expect Milei’s sweeping economic reforms to ultimately pave the way for a long-awaited return to Wall Street. That could come later this year if spreads keep tightening, Medeiros said. Joe Delvaux, portfolio manager at Amundi, says that while issuance in the second half of 2026 is a possibility, it’s more likely to get pushed toward the start of 2027.
At the moment, though, the Argentine Treasury says it can finance itself more cheaply at home while waiting for global bond spreads to tighten. The debt still trades wide of similarly rated peers, with benchmark dollar bond yields in the high eight percent range – above what officials say is justified given the country’s stronger fiscal position and improving exports.
“It’s proven to be the right strategy so far,” said Graham Stock, senior emerging-markets strategist at RBC BlueBay Asset Management. “Demonstrating market access would be positive, but they’re right to say it shouldn’t be at any cost.”
However, Argentina’s current funding mix leaves little wiggle room should any of its financing sources fail, market conditions deteriorate before next year’s presidential vote or should any election-related volatility push sovereign spreads wider.
“They are being very careful on not issuing at high rates, likely out of concern on the impact this can have on deficit metrics,” said Jimena Zuñiga, Argentina economist at Bloomberg Intelligence. “That’s a reasonable concern, but it carries significant risks because there could be shocks undermining those plans for 2027 – and they could be missing a good issuance window now.”
Argentina has about US$25 billion in dollar debt due in 2027, which it plans to pay with US$5 billion of local bond sales next year, as well as dollar purchases from the central bank, International Monetary Fund disbursements, proceeds from privatizations, and carryover cash from this year’s financing surplus.
“From an investor’s perspective, we’d feel more comfortable if they were to get it done ahead of next year,” said Jared Lou, portfolio manager at William Blair. “You have no idea what kind of volatility you’ll have going into the election cycle.”
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by David Feliba, Bloomberg
