Argentina's President Milei to issue a dollar bond, eyeing a return to global markets

BUENOS AIRES, Argentina — The libertarian government of Argentina's President Javier Milei announced Friday it would issue a dollar bond for the first time in nearly eight years, as the cash-strapped country seeks a return to international markets and faces an enormous sum of debt due in the coming months.

The dollar-denominated sovereign bond, issued under Argentine law and targeted at foreign and local investors, has an interest rate, or coupon, of 6.5% and matures in November 2029, the Economy Ministry said, without offering details on the size of the offering.

Analysts say the bond auction signals growing confidence in President Milei's reforms after his party's landslide midterm election victory reassured bondholders that his government would be able to pay them back.

''It shows they are taking steps — slowly — toward normalizing the market and reducing dependence on international reserves, which is a big concern,'' said Fernando Marull, an Argentine economist.

''Ideally, debt should be paid with refinancing, not with scarce reserves. It's like going to a bank and refinancing your loan instead of paying the whole thing in cash from your pocket. That's why this is so important."

Economy Minister Luis Caputo said the money would be crucial for settling part of the $4.2 billion in debt that's coming due on Jan. 9 without tapping reserves. Because the bond won't be issued under foreign law, he said, it won't need congressional approval.

''The reopening of foreign currency debt markets will expand the Treasury's options regarding the instruments available for debt management," Caputo wrote on social media, attributing the move to Milei's success in reining in the budget deficit and lifting most capital controls that fenced off its debt markets.

Chronic economic crises have led Argentina to default on its debt nine times, most recently in a 2020 restructuring. As a result, high borrowing costs and legal tussles with restive foreign investors have left the country unable to take on debt abroad for most of the past two decades.

Without tapping global capital markets — which is how many governments around the world borrow or roll over debts — Argentina will struggle to expand its economy, and to repay the more than $40 billion it owes the International Monetary Fund.

Earlier this year, Caputo secured a fresh $20 billion loan from the IMF to help Milei press ahead with fiscal reforms. To unlock successive tranches of funds, Milei's government committed to building up its net hard-currency reserves to around $5 billion by the year's end.

IMF spokesperson Julie Kozack told reporters on Thursday that ''meeting the end-of-year reserve target will be challenging" for Argentina. Warning that Milei's current exchange rate policy of propping up the peso slowed reserve accumulation, she added:

''We continue to advocate that the authorities should use the window of opportunity to implement a consistent and robust monetary and foreign exchange framework to help support the accumulation of reserves.''

That strategy was pushed to the extreme in the run-up to the midterm elections as doubts about the trajectory of Milei's harsh austerity plan triggered a run on the peso. With the official rate of the peso crashing against the dollar, U.S. President Donald Trump stepped in to save his ideological ally with a $20 billion credit line and outright purchases of pesos.

While the electoral win thrilled markets and vindicated Trump, unease remains that nothing can stop Milei from burning through foreign reserves again if he depends on a strong peso to fight inflation — not even this bond auction, which experts say is less attractive to foreign investors for being issued under local law.

''I don't think this represents a return to international markets,'' said Juan Battaglia, chief economist at Cucchiara, a stock brokerage in Buenos Aires.