Argentina’s recent credit upgrade is stimulating speculation that the nation may have another opportunity to access international markets following a missed chance in early 2026. According to investors, Fitch Rating’s decision to elevate the country’s credit score to ‘B-‘ may drive spreads back toward the multi-year lows observed in January. President Javier Milei may find an opportunity to secure funding ahead of the election-induced uncertainty that is anticipated to affect markets next year, as he aims for a second term. “There is a window opening up, but it will be narrow,” stated Thierry Larose. “With 2027 effectively closed by the political calendar, this leaves a real but limited runway, and the upgrade clearly enhances the conditions under which a deal could be executed.” Seasonal agricultural exports, energy revenues, and consistent demand for Argentine corporate debt are generating a stable influx of dollars, bolstering the currency and assisting the Central Bank in replenishing its reserves. It has already acquired over US$7 billion this year. The government has successfully secured more than US$3 billion in the domestic market and is currently pursuing a substantial bank loan supported by multilateral lenders.
Argentine bonds experienced a notable rally following the upgrade, as the 2035 notes – the most actively traded in the country – climbed to 76.7 cents on the dollar, resulting in yields decreasing to approximately 9.5 percent. The spread declined to a minimum of 515 basis points, marking the lowest level since February 18. Although that figure remains approximately twice the level that Economy Minister Luis Caputo has suggested for trading, investors contend that Argentina ought to seize the opportunity to return sooner rather than later. “With 2035 bond yields below 10 percent, the issuance window is open.” And “The opportunity is there, and it would be positive for the government to take it,” stated Ivan Stambulsky. “Investors express apprehension regarding potential volatility in the upcoming year attributed to elections, thus advocating for the establishment of a more substantial liquidity buffer as a prudent measure.” The government utilized a US$3-billion bank repo along with local placements to fulfill its debt obligations this year. It is anticipated that approximately US$4.5 billion will be allocated for July payments without the necessity of incurring new debt – Argentina has refrained from accessing global markets since it restructured US$65 billion of debt in 2020 following its ninth default. However, the countdown begins next year. Argentina is confronted with approximately US$25 billion in obligations due in 2027, of which around US$15 billion is associated with both domestic and international foreign-currency bonds. Milei’s ascent to power and robust electoral performance last year prompted a significant repricing in Argentine debt, as yields on longer-dated bonds declined from distressed levels to an eight-year low in January. The action heightened expectations for a return to debt markets, a course of action the government ultimately chose to forgo.
Despite the recent stagnation in gains due to political distractions, including purported corruption scandals and a decrease in Milei’s popularity, investors anticipate that the upgrade will progressively manifest in spreads, which have also tightened recently in the context of a wider trend in emerging-market bonds. “History shows that once countries move out of ‘CCC,’ new buyers show up, and they often show up quickly,” stated Mauro Favini. “This is not about optimism. It pertains to a shift in the structure of demand as the investor demographic expands. The nation has garnered several upgrades from prominent rating agencies during Milei’s administration as he systematically rehabilitated fiscal accounts and reduced inflation from triple-digit figures. Fitch had already undertaken this action twice – initially in late 2024, downgrading to ‘CCC’ from ‘CCC-,’ and subsequently again late last year to ‘CCC+. ‘Moody’s Ratings has assigned Argentina a rating of ‘Caa1’ following two upgrades, whereas S&P Global Ratings has rated it ‘CCC+’. While one upgrade partially facilitates access for certain institutional investors, a subsequent upgrade would broaden access to a larger pool of funds constrained by mandates that limit exposure to CCC-rated debt.
According to Daniel Chodos, Argentina’s spreads may initially narrow to approximately 450 basis points. “The opportunity to issue or execute liability management may arise, contingent upon the government’s readiness to endorse rates that are likely to remain comparatively elevated at that time.” Caputo has indicated that the government is not in a hurry, having successfully raised over US$3 billion domestically at lower rates via short-term placements, while also relying on multilateral funding and anticipated proceeds from privatisation. “As long as we have access to financing at around six percent to repay debt yielding closer to 9.5 percent, that’s what makes sense,” Caputo stated on May 6. “When that option is no longer available, that’s when we will ultimately turn to the market.” Investors assert that a liability management operation, akin to the one executed by Ecuador earlier this year, would alleviate the nation’s debt burden. The government is noted to be operating from a position of relative strength, with multiple financing options available – a rare luxury for Argentina. “We would frame it less as urgent and more as opportunistic,” Vontobel’s Larose stated, noting that his base case is that Argentina returns to markets in the second half of 2026. “The kind of deal you pursue when the opportunity presents itself, rather than out of necessity.”