Argentina bonds jump, 2035s hit record high on S&P upgrade

Argentina’s dollar bonds jumped across the curve on Thursday, with longer-dated securities rising more than two cents on the dollar after the country secured its second credit-rating upgrade in less than two months.

Global bonds due in 2035, a benchmark for the country’s international debt, rose as much as 2.9 cents to 79.4 cents on the dollar, a record high for the notes issued in 2020. The medium-term notes maturing in 2030 gained more than 1.2 cents.

S&P Global Ratings upgraded Argentina’s sovereign credit rating after markets closed on Wednesday, citing positive fiscal results and other measures taken by President Javier Milei’s administration to meet future debt payments. The South American nation was raised to 'B-' from 'CCC+,' leaving it six notches below investment grade, according to a statement from the ratings firm. The outlook is stable.

Investors said the move, while expected, brings Argentina one step closer to regaining access to international capital markets.

“Argentina has been hoping to get an upgrade prior to issuing in the market,” said Jeff Grills, head of US cross markets and emerging-market debt at Aegon Asset Management. “Now that the upgrade is here, we’ll start hearing about Argentina potentially issuing, which would be a major next step for the country in its path to normalidation.”

In the note, S&P cited easing economic vulnerabilities and improved external liquidity as key drivers of the decision, saying they set the stage for a continued economic recovery.

“The combination of continued fiscal surpluses and the accumulation of foreign exchange reserves by the central bank strengthened the government’s liquidity profile,” S&P analysts wrote. 

Fitch Ratings raised Argentina out of the highly distressed 'CCC' category and into 'B-' in May. 

“Spreads on Argentina’s sovereign debt should tighten,” said Daniel Chodos, a partner at local brokerage Dhalmore Capital. “They could initially compress toward the 400- to 450-basis-point range, opening a window for the country to issue debt in international markets.”

Milei’s administration is winning over investors with a mix of aggressive fiscal tightening, deregulation and steps to normalise Argentina’s monetary and exchange-rate regime. It has also stepped up reserve accumulation, with the Central Bank purchasing more than US$10 billion so far this year, while relying on local funding channels – including a series of dollar-denominated bond placements in the domestic market – and multilateral-backed loans to meet immediate financing needs.

The government has also maintained a primary fiscal surplus while benefiting from strong export performance driven by agricultural shipments and rising energy exports. The improvements have helped drive Argentina’s sovereign bond spreads back toward their lowest levels of the Milei era.  

Argentina has received multiple upgrades from major rating firms during Milei’s tenure as he restored fiscal accounts and brought inflation down from triple-digit levels. Fitch and S&P now have the country at the same level, both with a stable outlook. Moody’s Ratings has the sovereign at 'Caa1' after two upgrades, the last of which was in July 2025. 

S&P noted that the country will “likely” face stress over the next year and a half as Argentina gears up for presidential elections in 2027 as investors continue to question the durability of the reforms if Milei fails to secure a new mandate.

Still, the ratings firm underscored that the economic policies currently in place should enable the government to withstand pressure during an election year and meet its financing challenges.

“The rating upgrade in Argentina makes it more likely we will see an liability management exercise in Argentina, which would help to shore up international reserves ahead of the presidential election next year,” said Jared Lou, a portfolio manager at William Blair.