Return to debt markets: Caputo’s challenge after placing a dollar bond under local legislation

The economic team made progress last week in returning to the capital market after eight years by issuing a US dollar bond due November 2029, giving it access to a face value of US$1,000 million (US dollar effective value) at an interest rate of 9.26% per annum, higher than intended.

However, market analysts warn that the Minister of Economic Affairs, Luis Caputoyou still have to improve and point out a weak point political ability to consolidate progress: normalization of access to international markets under foreign legislation – foreign debt -.

The economic team’s speech had frequent deviations, which the team justified as a result of the progress of the stabilization and macro-organization program. In October, after the exchange with the United States for 20,000 million US dollars, the government envisaged two scenarios for maturities until 2026:

1. Reduce the country risk index and gain access to international financing, or
2. If they fail to achieve this, they resort to government help Donald Trump.

In the last few days the scenario changed after a release of Wall Street Journal –was later denied by the minister – and Caputo revealed that there were ongoing negotiations with international banks for a loan of up to $7 billion. However, he admitted that the amount to be withdrawn has not yet been determined due to the review of open alternatives from the recent placement.

In this way, the full return to international markets that the minister mentioned in October will be postponed in the medium and long term. The minister himself admitted it during his participation in the event organized by the IEB Foundation and the Juan Ignacio Abuchdid Foundation: “How high can country risk go? I would have been very wrong if you had asked me a year ago (…). Argentina has the potential to enormously compress country risk and part of this is due to the structure of current bonds, which are unattractive.”

In addition, the minister said: “The aim of the new dollar bond was to show the market that country risk would be different in more conventional securities.”

But for market analysts, the fall in the country risk index requires more than just diversification of bond offerings. “International managers and administrators of emerging debt funds evaluate the Relationship between reserves and gross domestic product (GDP),” he said Infobae the director of the IEB, Norberto Sosaand stressed that the minimum acceptable level is around 15%, while the accumulation in the Central Bank of the Argentine Republic (BCRA) is 6% or 7%.

Those who manage major global funds and have to decide which of the 92 emerging countries, including Argentina, to invest in pay attention not only to fiscal conditions – the variable controlled by Caputo – but also to the level of debt and the ratio of reserves to GDP.

So far it seems as if the Minister of Economic Affairs has underestimated this variable, based on the statement at the industrial conference that the Goal with the International Monetary Fund (IMF) Thanks to the swap agreed with the US Treasury, there was no reason to worry about claiming that the new loan from international banks would create scope for the BCRA Accumulate reserves.

“The BCRA needs to feel safe Inflation expectationsconfirms that this recovery in money demand is not just seasonal, but that there is actually a change in mood in society. And that politicians prove that they are capable of approving one Budget 2026 and make some progress Labor reform. Unless this happens, a significant decline in the country risk index is difficult to predict,” said Sosa.

For the Ecolatina economist: Lorenzo Sigaut GravinaThis week’s tender was a step towards a return to international markets, although the tariff target was not met as the minister envisaged an annual interest rate of less than 9%. “The Autonomous City of Buenos Aires (CABA) invested $600 million at an interest rate of 7.8% per annum, although it never defaulted. So there are reasons why it behaves better than the state. But Santa Fe achieved $800 million at 8.1% per annum,” he noted.

As revealed InfobaeMembers of the economic team expressed reservations about countries seeking funding. One of them said, “Where in the world have we seen provinces that have gone into debt? They don’t generate dollars, and in most cases they restructure their payments later,” while trying to remember which province in history has defaulted on time.

Still, the president himself Javier Milei congratulated Jorge Macri after the release of the new series 13 of Tango bonus for $600 million, at an interest rate of 7.8% per annum, one of the lowest interest rates in the jurisdiction’s credit history and with a significant improvement in the maturity profile. “Congratulations, Jorge Macri, on this achievement, which (as markets look to the future) is a true preview of the great and prosperous Argentina we work for. VLLC!”he wrote on the social network X.

There are executives who are more optimistic about the return to the capital market, although they prefer statements in confidential The purchase of reserves is highlighted as a necessary condition. “It’s good that the debt was placed on Wednesday. We have to take advantage of the market windows. It seems to me that in the first quarter they will place it in the States and if reserves are bought they will further reduce costs,” he said Infobae one of the sources.

While attending the IEB Foundation event, the group’s founder and president said, Juan Ignacio Abuchdidconsulted Minister Caputo on the reclassification at MSCI (Morgan Stanley Capital International) in light of the issuance of negotiable debt securities by the private sector and the increase in dollar deposits (more than $37,000 million by the private sector), but received no response.

Last June, MSCYo has excluded the country from its assessment to be reclassified in 2026. Therefore, Argentine stocks could only improve their status in 2027 and remain undervalued in the meantime standalone.