Argentine President Javier Mile’s administration has launched a new U.S. dollar bond aimed at raising up to $2 billion. Photo by Matias Martin Campaya/EPA
BUESOS AIRES, Feb. 27 (UPI) — Argentina’s government took a new step in its strategy to meet upcoming dollar-denominated debt maturities without again relying on international markets. In a challenging financial context, President Javier Milei’s administration launched a new U.S. dollar bond aimed at raising up to $2 billion.
The goal is to get ahead of payments scheduled for July, when about $4.2 billion in private loans come due. Instead of seeking funds on Wall Street or using the swap line negotiated with the United States, the Economy Ministry chose to raise those dollars domestically.
The decision comes amid a recent increase in Argentina’s sovereign risk, an indicator that reflects how investors perceive a nation’s ability to repay its debt and that, when it rises, makes external borrowing more expensive.
With that roadmap, the economic team faced the first test of the new instrument on Wednesday. In the initial issuance, it placed $150 million at an annual rate of 5.89%, below what market analysts had estimated.
The response exceeded official expectations. The Finance Secretariat reported receiving bids totaling $868 million, nearly six times the amount ultimately taken by the government. For the government, that level of interest confirms there is demand for Argentine dollar debt even in a volatile environment.
The bond, which can only be subscribed to and paid for in U.S. dollars, will be included in the regular biweekly auctions alongside peso-denominated securities. In each initial auction, up to $150 million will be offered, with the possibility of expanding by another $100 million in a second round the following day, until the planned program is completed.
Identified as BONAR 2027 or AL27 in some markets, the security will mature on Oct. 29, 2027, after Argentina’s 2027 presidential election. It offers a 6% nominal annual rate, with monthly interest payments, and will repay principal in a single installment at maturity.
The initiative comes at a key moment for Argentina, which faces heavy foreign-currency commitments midyear. In that context, securing dollar financing without turning abroad becomes central to organizing the payment schedule and maintaining investor confidence.
Financial adviser Gastón Lentini, founder of consulting firm Doctor de tus Finanzas, told UPI that the dollar bond launched by Argentina has sparked strong interest among local investors.
“Unlike almost any bond issued before, this one pays interest every month,” he said.
In practice, this means that if someone invests $10,000, they will receive $50 each month until October 2027, when the bond matures and the invested principal is returned.
Economist Elena Alonso, co-founder of consultancy Esmerald Capital, noted that anyone can invest in this bond.
“The minimum amount is one dollar. Anyone who has never invested before only needs to open an investment account,” she said.
Lentini explained that in July the government faces a debt payment of about $4.2 billion, which includes interest and principal repayments on certain bonds.
“The limited level of international reserves and restricted access to dollars forces the government to be creative in raising the necessary funds and meeting payments,” he added.
Regarding the decision to finance domestically instead of going to international markets, the specialist said the current sovereign risk level would require Argentina to offer rates above 9% if it turned to foreign investors.
“Taking advantage of the restrictions that still exist on taking foreign currency out of the country, the economy minister is managing to finance with Argentines’ own dollars at a rate close to 6%, which is an achievement for the government,” he said.
On the currency swap line with the United States, Lentini said it will not be necessary. According to him, the combination of agro-industrial exports, oil, gas, minerals and incentives from the RIGI program allows the country to gather enough dollars to meet its obligations.
“The swap line serves as an additional backstop, but the strategy of paying with its own money strengthens investor confidence in respect for contracts,” he added.
Finally, Lentini said it would be positive for sovereign risk to decline to facilitate a debt rollover — a restructuring or refinancing of maturities — though if that does not happen, he does not see a risk of default this year, noting that Argentina is one of the few countries in the world with a surplus.
Alonso agreed that resorting to the swap line will not be necessary, as the country’s dollar reserves are growing. She also noted that, for the first time in years, private debt issuances and repurchase agreements with banks helped cover maturities.
“The swap line with the United States remains available as a backstop, but the government seeks to build credibility by using its own resources first,” she said.