Brazil & Southern Cone - August 2026

Argentina’s Economy Minister Luis Caputo has unveiled a financial programme to convince investors that the government can meet all of its foreign-currency debt obligations through to the end of President Javier Milei’s term without issuing new debt in international capital markets. The announcement in July was aimed at calming nerves ahead of foreign-currency financing needs that exceed US$44bn through the end of next year.

The main message is that Argentina will keep honouring all its obligations but without increasing net indebtedness. “New debt is issued exclusively to refinance the principal of inherited debt,” Caputo said on 6 July. Interest is to be paid out of the fiscal surplus. The 2026 financing effort would generate a surplus beyond its needs of US$3.7bn and act as a buffer to ease pressure in 2027, when maturities are larger and fall in an election year.

Caputo said that tapping into international bond markets is a contingency, not a goal. Instead, the idea is to develop the local capital market and reduce Argentina’s historic reliance on external financing by issuing new peso- and dollar-denominated debt locally. The government is targeting around US$2bn more in local placements this year and roughly US$5bn in 2027, though some economists consider that goal as ambitious, given uncertain investor appetite in an election year.

In order to help reduce borrowing costs, the government will rely on guarantees from multilateral lenders, which have played a decisive role in bridging Argentina’s mid-2026 payment needs. The World Bank and the Inter-American Development Bank (IDB) have both committed guarantees intended to help Buenos Aires borrow more cheaply from private banks. The IDB’s board approved a US$550m guarantee in June, its first ever granted to Argentina to support structural reforms, enabling roughly US$1.2bn in private financing tied to security and justice reforms. Meanwhile, the World Bank also announced in June the approval of a financing package to help mobilise up to US$2bn in commercial loans to support Argentina.

Market pricing has, so far, moved in the government’s favour. Argentina’s JP Morgan-measured country-risk gauge fell to around 408 basis points in mid-July, near its lowest level since April 2018, as sovereign dollar bonds rallied in New York. The 15 July debut auction of the new AO29, a dollar-denominated local bond that pays returns monthly, drew US$1.05bn in bids for a bond targeting US$2bn in total issuance, pricing at an effective annual yield near 8.29%.

But the real test lies in 2027 when debt maturities climb further, and the refinancing plan must hold up through a presidential transition. Investors continue to demand a premium for bonds maturing after the change of government, meaning investors are uncertain whether Milei will even be around for another four years, let alone whether he will have a mandate to continue pursuing rigorous fiscal discipline that allows them to be paid in years to come.

Recent opinion polls show his approval ratings to have stabilised between 38% and 40%, roughly 10 percentage points lower than during his first year in office but still higher than that of his predecessors, Cristina Fernández de Kirchner (2007-2015), Mauricio Macri (2015-2019), and Alberto Fernández (2019-2023), at the same point in their respective mandates.

Credit ratings

The financing plan comes against a backdrop of improving credit assessments. In May, Fitch upgraded Argentina’s long-term foreign currency and local currency issuer default rating (IDR) to ‘B-’ from ‘CCC+’, and in June S&P raised its long- and short-term local and foreign currency sovereign credit ratings on Argentina to ‘B-/B’ from ‘CCC+/C’. In July, Moody’s raised the long-term local and foreign-currency issuer ratings of Argentina’s government from Caa1 to B3.