Two factors are currently prompting apprehension among investors in Argentine government bonds regarding the year 2027. The first point to note is that the sources of financing for the government of Javier Milei to address next year’s debt payments remain ambiguous, despite the president’s assertions of having a US$125 billion “bazooka” available to avert currency runs in 2027. In 2027, the Milei administration will encounter debt maturities amounting to nearly US$25 billion. Approximately US$12 billion is owed to private bondholders, while US$7.5 billion is due to the International Monetary Fund. The second concern is the increasing uncertainty regarding Milei’s ability to secure victory in the first round of the election scheduled for October 24, 2027, as he seeks reelection. The most evident indication of these apprehensions is the persistent increase in Argentina’s country risk, as indicated by JPMorgan’s EMBI+ index, which monitors the extra interest rate the nation would need to pay to secure borrowing in international markets.
At Tuesday’s close, country risk was recorded at 684 basis points, reflecting an increase of nine points from the prior close, or 1.3%. Although the index retreated after surpassing the 700-point threshold early in the trading session, it maintained its position at the highest level since November 2025. The index reflects the performance of a country’s bonds within the context of international debt markets. When bond prices decline, the risk associated with the country increases. In a recent daily report, analysts noted that the market has shifted its focus, indicating that it has “stopped charging Argentina for the external environment and started charging it for its 2027 dollar needs.” They observed that between Friday, October 9, and Friday, October 16, the yield on 10-year US Treasury bonds decreased from 5.24% to 5.09%, marking its lowest level since September 22. “That decline in the benchmark rate should have helped emerging-market debt. However, Argentina’s country risk rose in each of the four trading sessions,” Cohen analysts said.
“What is being priced in is not peso-denominated solvency, which the fiscal surplus demonstrates month after month, but the ability to secure the dollars needed in 2027, for which there is still no clearly defined source,” they added. Similarly, economist Gustavo Ber stated that investors “remain focused on the financing strategy” of the economy ministry, led by Luis Caputo. “That is why they are paying close attention to signals about alternative sources of financing, as well as the possible use of currency swaps,” he added. During his visit to the IMF in Bangkok, the capital of Thailand, Economy Minister Caputo stated that Argentina could utilise its currency swap with China to fulfilll obligations to holders of dollar-denominated bonds issued under Argentine law. In August, the Central Bank of Argentina extended its US$19 billion currency swap agreement with the People’s Bank of China for an additional five years. The agreement encompasses an activated portion totalling US$5 billion.
Ber stated that political uncertainty “has been deepening, prompting a cautious response from market participants.” He noted that the political landscape still “offers no clear picture of electoral strategies,” while “the implied probability of the government’s reelection is declining, as reflected in the valuation of financial instruments.” Attention is concentrated mainly on the opposition, especially regarding the ability of Peronism to assemble a ticket that garners widespread backing from its electorate and circumvents a possible division. “A scenario with multiple presidential tickets could improve the ruling party’s chances, especially if the PASO primaries (Open, Simultaneous and Mandatory Primaries) are not held,” Ber said.
