Argentina to sell local law bond in dollars amid Milei momentum

Argentina announced it will sell a local law bond in dollars, seizing on positive momentum after President Javier Milei’s resounding win in October’s congressional midterms.

The so-called Bonar bond is due in November 2029, the Economy Ministry said on X. Part of the money will be used to cover upcoming maturities on sovereign debt, Economy Minister Luis Caputo said – Argentina has about US$4.5 billion in bond payments due in January, and a similar amount for July. 

“A large maturity is coming, and with this bond I’m covering a part of it,” Caputo said in a television interview with local station A24 Friday morning. “The idea is to pay the January maturities without reserves falling,”

Argentina markets have mounted a comeback as Milei’s party won more congressional seats in a late October vote than pundits expected. Yields are now down to close to 10%, or about six percentage points above benchmark US Treasuries. That puts them near the levels that Caputo has signaled to investors he’d be willing to sell bonds at, according to people familiar with the matter.

Caputo said this week the government is “very confident” country risk will drop in coming weeks and that “we are the closest we’ve ever been to having access to markets.” He added that the country has received offers from banks worth between US$6 billion and US$7 billion and is evaluating how much to borrow to make sure its reserves don’t drop due to the January debt payments.

The last time Argentina accessed global markets was in 2020, after it last restructured its debts following a default. In May, it issued a five-year bond denominated in pesos aimed at international investors who are allowed to purchase it in US dollars. 

The coupon on the Bonar bond was set at 6.5 percent, with payments due every six months. The government will take bids on Wednesday, and announce results next Friday.