Argentina’s government will issue a five-year bond denominated in pesos that’s aimed at international investors who are allowed to purchase it in US dollars, a move the government hailed as its return to global markets after a sovereign restructuring during the pandemic.
The May 28 auction is set to raise up to US$1 billion, Finance Secretary Pablo Quirno posted on X Monday.
Analysts quickly pointed out the bond will help accumulate the Central Bank’s foreign reserves, while Economy Minister Luis Caputo described the auction as a milestone, even though one of his deputies clarified it would be issued under local Argentine law instead of New York law like most international bonds.
“Argentina returns to earn international market access to refinance capital in local currency,” Caputo posted shortly after on X too. “It’s something that the vast majority of countries do with normality, but wasn’t possible for Argentina given its disastrous economic track record.”
Quirno posted that it will mature in 2030 with a fixed interest rate and the instrument will also include a two-year put option, giving investors an early exit alternative before the next presidential election in late 2027.
It’s the first time in nine years that Argentina has issued a peso-denominated bond targeted at international investors. The last sale of this kind happened during the last pro-business administration when Argentina sold peso debt to global funds such as Franklin Templeton.
Analysts applauded the auction as a sign of Milei’s ability to rein in triple-digit inflation and maintain a relatively stable exchange rate.
“Argentina’s return to the markets to issue long-term debt linked to the peso is a key sign of confidence in the government’s stabilisation programme and its ability to restore the Argentine peso’s credibility as a store of value,” said Juan Pedro Mazza, institutional sales associate with Buenos Aires-based brokerage Grupo Cohen SA.
The bond sale is part of a broader strategy by Caputo and President Javier Milei to boost Argentina’s international reserves ahead of a key target date under the country’s US$20-billion agreement with the International Monetary Fund.
Argentina has committed to raising its net international reserves by US$4.4 billion by June 13 to comply with the IMF programme, but private economists’ estimates indicate the monetary authority remains significantly short of that goal. To help bridge the gap, the government also recently announced it is negotiating a US$2-billion repurchase agreement, or repo, with a group of international banks.
The government will also offer a range of peso instruments to domestic investors, including short-term notes maturing between June and November 2025, and medium-term bonds maturing in 2026.
The peso bond sale to global investors marks a new step in the Milei administration’s evolving financial strategy. While the government has focused heavily on fiscal tightening and monetary restraint, it now appears to be seeking fresh external funding sources to meet IMF targets without drawing down Central Bank reserves or issuing pesos that would add pressure to Argentina’s already high inflation.
Milei’s economic team has resisted buying dollars in Argentina’s official currency market by offering pesos, in line with its broader objective of avoiding monetary expansion. This strategy is part of a plan to drive down inflation and strengthen the peso in the run-up to Argentina’s midterm elections in October.
The bond sale “opens door to reserve accumulation through future deals,” said Joaquín Bagues, managing director at brokerage Grit Capital Group. “This deal is a liquidity event for the new age of carry trade in Argentina.”
by Ignacio Olivera Doll & Kevin Simauchi, Bloomberg
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