Argentina is preparing to return to the international debt market finance

Regardless of whether this issue continues or not, the mere fact that the government is considering this possibility highlights the scale of the transformation the country has witnessed in the past two months.

In September, panic spread across Argentine markets as investors feared a rollback of President Javier Miley’s fiscal austerity program due to increasingly strong opposition in Congress. The peso fell and yields on the country’s dollar bonds rose to more than 17%, prompting the Trump administration to send emergency aid to Miley to halt the selling.

The strategy worked. First, markets stabilized, then rose sharply as Miley’s party won more seats in Congress in the vote at the end of October than experts had expected. Yields have now fallen to nearly 10%, or about six percentage points above benchmark US Treasuries. That puts yields close to levels at which Economy Minister Luis Caputo has signaled to investors he would be willing to sell foreign debt, according to people familiar with the matter.

Argentina has been out of the market since defaulting for the third time this century, during the pandemic. Miley, a liberal economist, has made returning to debt markets by early 2026 a major goal since taking office in 2023. It would also provide the country with an injection of dollars that could be used to pay down foreign debt — about $4.5 billion due in January, and a similar amount in July — and rebuild hard currency reserves.

“We’re probably not that far away” from Argentina’s return to global markets, said Jorky Urquieta, co-head of emerging markets debt at Neuberger Berman. “A return of less than 10% is the magic number.”

The new bonds are likely to be just one step in a series of debt transactions, according to people familiar with the discussions. There are talks with several banks about options that could help reduce risk premiums and allow Argentina to access markets.

Ideas include a buyback deal that would be used to give investors a financial incentive as part of a debt swap, the people said. Among the available options are a liability management deal with a buyback to raise up to $5 billion to cover the debt extinguishment in January, using importer bonds as collateral, and a debt-for-education swap, similar to an environmental swap in Ecuador.

“Since the elections, we have been closer than ever to market access,” Caputo said at an event in Buenos Aires on Wednesday, adding that the government was “very confident” that the risks facing the country would decrease in the coming weeks.

Caputo, who told investors last month that Argentina plans to buy back bonds due in 2029 and 2030, said Argentina has also received offers from banks worth between $6 billion and $7 billion and is evaluating the amount of lending to make sure its reserves are not reduced by debt payments in January.

Argentina could turn to the markets now – especially given the endless demand for high-yielding assets from emerging markets. But the government expects a compression of about 100 to 150 basis points in the yield curve, people familiar with the plans said, so that costs fall to roughly the 7% to 8% paid by the country’s largest companies.

They added that approval of labor and tax reforms by the new Congress, which begins work on December 10, where Miley’s Libertarian Party represents the largest bloc in the chamber, could be the impetus behind this.

Argentina “will come to the market,” said Pramol Dhawan, emerging markets portfolio manager at Pacific Investment Management. “That will probably be a topic for next year.”

The appetite for Argentine debt has become evident in recent weeks. Data compiled by Bloomberg showed that companies and counties have sold more than $4 billion in dollar bonds since the Oct. 26 election, compared to just $130 million in the three months before the vote.

And there’s more on the way. Oil and gas company Vista Energy is considering market access on Wednesday, and almost all provinces are said to be considering new issues soon. Santa Fe Province is holding meetings with investors ahead of the planned debt sale, and Chubut Province is also said to be working on an issuance. If Argentina can buy back its bonds maturing in 2029 and 2030, even riskier names like Chaco could appear on the market, the source said.

Caputo’s plans to issue new debt, which he announced early last year, have always been met with some skepticism. At the time, some Argentine bonds were yielding around 20%, including the worst possible scenarios.

Even amid the renewed optimism, doubts remain. Argentina, according to some analysts, still needs to increase its dollar reserves – to do this, it is necessary to change the exchange rate regime that Caputo and Milley promised to maintain.

Even if the country can implement a buyback to cover January payments, buy back bonds maturing in 2029 and 2030 and regain market access, it will still need “significant” dollar purchases, economist Evan Stambosky and Barclays strategist Jason Kane said in a report this week.

“A significant improvement in liquidity would require aggressive purchases of dollars, which we consider unlikely in this exchange rate regime,” they wrote.

The last time Argentina returned to global debt markets, it did so with force. The country sold $16.5 billion in bonds, setting a single-day fundraising record for a developing country. Investors bid for $68.6 billion of debt, and the returns were lower than those paid for bonds with similar credit ratings.

Dozens more issues followed, including 100-year bonds, before the country defaulted again – for the ninth time since its independence in 1816.