Argentina sold US$150 million of a dollar-denominated bond on Friday to measure investor interest in financing the government beyond President Javier Milei’s first term. According to the Economy Ministry, the October 2028 local-law bond yielded 8.9%. The bond has a maximum approved size of US$2 billion but will be issued weekly in tranches of up to US$250 million. The small deal was closely monitored by investors as a barometer of political risk beyond Milei’s current administration, which ends in December 2027. A shorter-term government security, the Bonar 2027, trades closer to 5.1 percent.
Economy Minister Luis Caputo noted on social media that the two yields indicate the premium investors seek to hold debt beyond the next political cycle. Caputo, who rejected a return to international markets earlier this year, thinks Argentina’s sovereign risk, 580 basis points, should be half that. Investors have cheered Milei’s fiscal tightening, which has lowered sovereign spreads since last year’s midterms, but uncertainty about its sustainability under a future administration weighs on Argentina’s borrowing costs.
“This placement effectively allows the market to price so-called reversal risk,” wrote Gustavo Araujo before the sale. For sovereign debt investors, the key concern is how sustainable existing policies are and whether a future administration could change course and affect asset valuations.