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Argentina has raised $ 1 billion of international investors in a vote of economic confidence for the libertarian president Javier Milei seven years after the country took advantage of the last time the world markets of capital.
The sovereign bonus called with weight, issued under Argentine law and addressed only to foreign investors, was offered in dollars, a measure that will promote the country’s foreign currency reserves, but will be paid in pesos. It was issued in a coupon of 29.5 percent and mature in 2030.
“Excellent news,” said Milei Economy Minister Luis Caputo, in X after the authorities announced that the offers had exceeded the established maximum of $ 1 billion by the government. “Being able to refinance the main maturities is crucial!”
Caputo has affirmed that the auction represents the “return to access to the international market” of Argentina after a 2020 restructuring sent costs of upward indebtedness, although the bonus does not pay in dollars and was not issued by foreign law.
However, analysts said that Wednesday’s auction demonstrates the increase in appetite for Argentine debt.
William Jackson, chief economist of emerging markets of Economics, said that Milei had made significant progress when he reached the budget deficit and raising most capital controls while obtaining an IMF agreement of $ 20 billion in April in April to increase the reserves of the Central Bank. “That has increased investor confidence and government confidence that the debt can successfully issue.”
The bonus includes a two -year sale option, which allows investors for an exit before the 2027 presidential elections where voters will decide whether or not they will continue the impulse of austerity and deregulation of the president or not.
The indebtedness costs of Argentina have collapsed since Milei’s electoral victory at the end of 2023. The interest premium on the US Treasury Bonds. UU. That investors require a debt called in the Argentine dollar has fallen from more than 25 percentage points to 6.66 percentage points. Interest rates are established higher for weight debt to reflect the risk of currency depreciation.
But investors remain nervous about Milei’s exchange rate policy, which has significantly strengthened the weight in real terms during the past year, and its slowness in the reconstruction of the hard currency reserves of the Central Bank, which will be necessary to pay some of the country’s debts until it returns completely to capital markets.
“For five years, we do not know what the currency regime will be,” said Christine Reed, a debt fund manager of emerging markets in ninety one.
“In two years there will be a presidential election. The put is particularly valuable for investors, since many of the changes made by the administration of Milei have been carried out by executive orders. These can be very easy to relax in another administration.”
An initial payment of $ 12 billion of the IMF in April lifted reserves of dangerous levels at the beginning of the year. But Argentina remains far from the objective of agreed to accumulate another $ 4.4 billion in its reservations before June 13.
The Government has said that it was negotiating a repurchase agreement of $ 2 billion with several international banks to help fulfill the objective of the reserves.
Milei has promised not to build reservations in the same way as the previous Argentine governments issuing pesos to buy dollars, because he wants to avoid expanding the monetary base of the country and weakening the weight, which could rekindle chronic inflation.
The Central Bank spent at least $ 409 million in April to underpin the peso in the futures markets, according to the data published last week, despite the IMF loan agreement saying that the authorities should only intervene if the “disorderly market conditions”.
Milei has said that it would only buy dollars if the currency is strengthened at 1,000 pesos to the dollar, the upper band of an exchange rate float agreed with the IMF in April. On Wednesday the peso was quoted at a rate of 1,160 per dollar.
The sale of bonds called with weights for dollars, an unusual mechanism used for the last time by Argentina in 2018, was designed to avoid this self -imposed restriction, economists said.
It would allow Milei to buy dollars using weights issued by the Central Bank earlier this year, said Salvador Vitelli, head of research of the Roman group in Buenos Aires.
“This is an indirect way of buying dollars, which helps to answer the big doubt that investors had about the accumulation of reserve. It could help further reduce the country’s risk,” he added.
