Argentina waiting on yields to fall below 10% before debt market return

Argentina is waiting for yields on its sovereign bonds to edge below 10 percent before exploring a long-awaited return to international capital markets, a government official told investors in a presentation in Buenos Aires.

Finance Secretary Pablo Quirno’s comments, made during a meeting last week, reflect a more concrete signal from authorities who previously said they expect to sell debt again by January 2026. The information comes from people in attendance, asking not to be named because the meeting was private.

Money managers have cheered President Javier Milei’s efforts to boost economic growth, keep inflation down and maintain budget surpluses. The extra yield investors demand to hold Argentine debt over US Treasuries, a measure of country risk, is down some 1200 basis points since Milei took office in December 2023, according to a JPMorgan Chase & Co index. Sovereign bonds were ranked as one of the best trades in emerging-markets last year.

While Quirno didn’t specify which measure he was looking at, some of the country’s notes yield between 11 percent and 13 percent when measuring yield-to-worst, a metric that assumes several scenarios but not a default. When using yield to maturity, some of Argentina’s bonds are between seven percent and 10 percent, according to data compiled by Bloomberg.

“The economic reform program we’re carrying out in Argentina will restore our access to markets so we can refinance our bonds at some point in the future,” Quirno said in a written reply to questions. “To speculate when or at what levels is to engage in fortune-telling and that’s something we don’t do.”

Argentina, a serial defaulter which last reneged on debt payments in 2020, hasn’t tapped markets since 2018.

Lawsuits, IMF

The government faces a wave of legal challenges abroad, including disputes over the state’s takeover of oil-driller YPF and changes to GDP-linked bond payments.

Argentina is subject to enforcement action on some judgments in UK and US courts, and investors and litigation funds are waiting for the government to negotiate on potential settlements to those claims. The lawsuits may complicate the country’s foray into issuing debt.

The rally in bonds has also faded this year, with Argentina lagging peers amid concerns over the country’s currency policy and as EM investors shift away from junk-rated debt toward higher-quality dollar bonds.

For gains to resume, the government needs to secure fresh funding from the International Monetary Fund, according to asset managers. Milei also needs to secure more congressional seats during midterm elections in October to expand his political support, they say.

Quirno told investors that he was optimistic the deal would allow officials to bolster the Central Bank’s reserves and lay the groundwork for lifting a litany of currency and capital controls, according to one of the people in attendance. He did not disclose how much Argentina would get from the IMF, the person added.

Firms like UBS Group AG, Morgan Stanley and Bank of America Corp, see the Washington-based lender giving Argentina up to US$20 billion, including anywhere between US$5 billion and US$10 billion in disbursements for 2025.