The recent “Argentina Week” held in Paris was characterised by a series of investment announcements and government initiatives aimed at attracting foreign capital. Announcements for investment projects in energy, mining, and the automotive industry totalled US$27 billion. It has been confirmed that the Final Investment Decision for Argentina LNG – the largest investment in the country’s recent history at US$51 billion – will be signed on November 26. This project will enable the export of Vaca Muerta gas in the form of liquefied natural gas. Another development was the Argentina Citizenship by Investment Program, an initiative that will allow individuals to apply for citizenship through a contribution of US$350,000 to the government or the purchase of a public bond for US$800,000. The issue, however, is that even that series of announcements failed to soothe the market. The clearest example of this is that the JPMorgan EMBI+ index for Argentina, known as “country risk,” which reflects the interest rate Argentina would pay to borrow abroad, has not stopped climbing.
At the close on Friday, country risk was recorded at 650 points, marking the highest level since December 2025. The index is based on the performance of that nation’s debt bonds in the international debt market. This indicates that a decline in bond values corresponds with an increase in country risk. Argentina’s volatility is not occurring in isolation. For weeks, bonds from major global economies have been undergoing a significant sell-off. This resulted in a rise in yield to offset the decline in price. The recent sell-off can be attributed to a confluence of factors: escalating global inflation, apprehensions regarding elevated spending levels, and intensified competition for financing from large firms engaged in AI development, commonly referred to as “hyperscalers.” For instance, the yield on the 10-year United States Treasury bond – a global economy thermometer – reached 5.34% this week, marking its highest level since 2004.
Analysts articulated in their latest report that, while Argentina adhered to the global trend, it experienced “a significantly larger correction” compared to other emerging economies. The report elucidates that this phenomenon is attributable to a series of “local uncertainties,” prompting investors to seek an additional premium. One of the points emphasised was the deceleration in reserve acquisitions by the Central Bank in recent months. The effect was notably pronounced in September, as the bank recorded a mere net accumulation of US$473 million, marking the lowest monthly balance of 2026. In comparison, it secured US$768 million in August and US$2 billion in July. This, in turn, raises concerns regarding the government’s dollar financing.
In 2027, the Milei administration will encounter maturities approaching US$25 billion. Approximately US$12 billion is allocated to private bondholders, whereas US$7.5 billion is designated for the International Monetary Fund. “The global context helps explain the direction of the declines, but domestic factors continue to amplify their magnitude and the increase in the cost of sovereign financing,” the PPI report added, referencing political uncertainty regarding the 2027 elections, as investor dollarization puts pressure on the exchange rate during pre-election periods.
