Key Takeaways
- Argentina’s Ministry of Economy announced the issuance of a new four-year, dollar-denominated National Treasury Bond (BONAR 2029N) with a 6.5% coupon, marking the country’s return to the debt market after an eight-year absence from international capital markets.
- The bond issuance is aimed at partially refinancing significant principal maturities on the existing AL29 and AL30 bonds, estimated at around US$4.1 billion, which are due in January 2026.
- Despite being celebrated as a “return to markets,” the bond will be issued under local Argentine law, a measure that analysts suggest limits its appeal to international investors who typically prefer the greater legal assurances of foreign jurisdictions like New York law.
Minister of Economy Luis Caputo confirmed this week that the Argentine government is returning to the capital markets, announcing a highly anticipated debt auction designed to refinance future maturities and bolster the Central Bank’s net reserve accumulation efforts. The issuance is the first sovereign dollar-denominated bond since January 2018, when Caputo, then serving as Finance Minister under President Mauricio Macri, oversaw the previous offering.
The new instrument, officially called the National Treasury Bond in US Dollars 6.50% (BONAR 2029N), matures in November 2029 and carries a 6.5% annual nominal interest rate (TNA), with semi-annual coupon payments. President Javier Milei celebrated the development on social media, echoing the sentiment that Argentina is regaining access to external funding sources.
However, the primary purpose of the new issuance is not to raise fresh capital for spending, but strictly for liability management. According to the Ministry of Economy, the proceeds will be used to “partially cancel” the principal payments on the AL29 and AL30 bonds, which face significant maturities on January 9, 2026.
Caputo stressed that this ability to refinance old debt is essential to stabilizing Argentina’s financial outlook. “By being able to refinance the debt, every dollar that the Central Bank buys can now be accumulated,” he explained, arguing that this resolves the “debate about accumulation” of reserves, a priority mandated by the International Monetary Fund (IMF). “Refinancing the capital is basic because, otherwise, no country can handle being forced to pay the capital [outright].”
### Market Testing and Legal Hurdles
While the move signals growing market confidence following the compression of interest rates on existing dollar bonds, analysts caution that the issuance constitutes a “market test” rather than a full return to international funding.
The key constraint lies in the legal jurisdiction. Unlike recent highly successful provincial and corporate debt issuances—such as those by Santa Fe and the City of Buenos Aires, which utilized New York law—the national bond will be issued under local Argentine law. This decision decreases the number of potential international buyers who seek the controlled risk environment provided by foreign legal systems.
Gabriel Caamaño, head of Outlier, described the placement as a critical first step. “It’s a local law bond, short-term. It’s a first step, not a proper return to the markets,” he noted, explaining that a true international return would typically involve a longer-term bond under foreign law.
The announced 6.5% coupon is indicative of Argentina’s enduring risk profile. While the rate is competitive compared to the current yield on the existing local-law AL29 bond (which trades around 9.7%), it is significantly higher than that offered by neighboring, lower-risk sovereigns. For example, bonds with similar maturities in Chile and Brazil yield between 4.4% and 4.8% annually.
Furthermore, Argentina’s country risk index remains stubbornly high at 634 points. Market economists estimate that for the sovereign to achieve unrestricted access to global markets, the index would need to fall by an additional 100 to 150 basis points, closer to regional peers like Uruguay (70 points) or Brazil (192 points).
Caputo acknowledged that the country risk “could be much lower” but expressed confidence that the issuance of this more traditional bond—which pays interest semi-annually rather than being a zero-coupon structure—should inherently trade at a lower yield than older instruments, thereby contributing to the desired compression of sovereign risk.
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