Argentina official says country made payments on sovereign debt

Argentina paid international bondholders before a Thursday deadline, marking another step in President Javier Milei’s efforts to restore investors’ confidence in the serial defaulter. 

The government had some US$4 billion worth of debt, between principal and interest payments, due on a slate of hard-currency notes. The payment included some US$2.65 billion of credits issued under New York law in a 2020 restructuring. 

Finance Secretary Pablo Quirno said on a post on X Thursday morning that the government made its debt payments, without giving further details. The trustee BNY Mellon did not immediately respond to a request for comment on the status of the payment. 

Despite a chronic shortage of cash, authorities pledged to have the money ready months ago, saying in July and October that they’d tap funds available from fiscal surpluses and the country’s international reserves.

The tab, roughly double the amount paid to creditors last year, follows the government’s unveiling of a US$1-billion repurchase agreement last week with five top banks, including JPMorgan Chase & Co and Citigroup Inc, that will buttress the country’s treasure chest of dollars for future debt payments this year.

Milei is working to sustain the optimism surrounding his austerity project. Already, the economy exited recession in the third quarter of last year and his team has managed to keep cooling inflation while overseeing a stronger peso, helping him remain Argentina’s most popular politician despite his policies imposing a higher cost of living. 

Still, the bond payment alone won’t help Milei hold onto Wall Street support that helped the country’s debt post some of the best returns in emerging markets in 2024. Markets are keen to see Milei sign a new agreement with the International Monetary Fund to succeed the current US$44-billion programme.

With a midterm election at the end of this year, the president is staring down high levels of poverty and inflation still over 100 percent. Investors are closely watching how the government dismantles capital controls without stoking inflation, a delicate balancing act that’s doomed previous Argentine leaders.