Provinces eye debt sales as economic optimism mounts

Two Argentine regional governments are exploring a return to international bond markets after a near decade-long absence, tapping into Wall Street confidence that the economy is rebounding and inflation is finally back under control.

Buenos Aires City— which oversaw a failed debt tender offer toward the end of 2024 — and Córdoba Province are each mulling the sale of around US$500 million of bonds between March and May, according to people with direct knowledge of the matter.

State officials have met with investors to gauge demand since the second half of last year, aided by banks including JPMorgan Chase & Co and Santander, the people added, asking not to be identified as the deliberations are private. Spokespeople from both lenders declined to comment.

The plans, while still in their preliminary stages, highlight how Argentina’s provinces are benefitting from bullishness surrounding the government’s austerity measures and its success in slashing inflation. If they succeed in issuing bonds, it could serve as an early signal to investors that the sovereign may also look to launch its own return to capital markets.

It’s an auspicious moment for Argentina. The economy is expected to bounce back from a bruising recession and grow 4.6 percent this year, with annual inflation projected to slow to 23.2 percent by the end of 2025 from 118 percent in 2024, according to a January Central Bank survey. Its dollar bonds were some of the best trades in emerging markets last year, and the country is in talks with the International Monetary Fund for a new agreement that’s expected in the next few months.

Still, President Javier Milei’s administration has no shortage of challenges ahead. Poverty has surged, long term investments have yet to materialise and the country’s web of currency and capital controls remains in place.

This week, Milei became embroiled in a scandal over his promotion of a cryptocurrency that soared in value before collapsing. The debacle, which triggered calls for his impeachment and lawsuits, caused a slide in the country’s assets.

Trying again

Buenos Aires City is considering a sale in March or April, depending on developments between Milei and the IMF, one of the people said. Economy Minister Luis Caputo has said that final details of an IMF deal are currently being ironed out.

Fund managers have said an IMF accord with fresh cash would trigger another rally in sovereign notes, reducing the extra yield investors demand to hold Argentine debt — a potential boon to regional bonds.

As one of the country’s richest regions, Buenos Aires has avoided the defaults that have plagued South America’s second-largest economy. Still, local officials were unsuccessful in a December debt tender in which they only secured the participation of people holding about a third of outstanding bonds due 2027, as they struggled to track down enough retail investors who owned the securities.

Currently, the municipality’s 2027 dollar notes change hands at par and yield around 303 basis points over US treasuries, according to pricing data compiled by Bloomberg. Some US$330 million of principal and interest on those bonds are due in June.

Riding coattails

Córdoba is keen to follow with a debt sale of its own between April and May. The province wants to see if it can ride the coattails of Buenos Aires’ operation, should it drum up enough demand, one of the people added.

The local government currently has international bonds due in 2025, 2027 and 2029 with payments on some of those notes tallied at roughly US$149 million coming due in June.

Even if both sales go ahead, a sovereign issuance wouldn’t be sure to follow. Earlier this year, Milei said he plans to tap capital markets after he lifts the country’s currency controls, although he did not provide a specific timeline. Economy chief Caputo previously told investors in New York that the goal was to issue debt by 2026.