The payment, which covered both principal and interest, was made by the central bank despite some concerns over the country’s depleted foreign reserves.
Even so, investors had largely expected Argentina to meet the obligation, and bonds traded calmly this week in a sign of market confidence.
Argentina has successfully paid $4.3 billion to sovereign bondholders, meeting its January 9 deadline. This crucial payment, despite low foreign reserves, aims to boost investor confidence and reopen international capital markets. The government is keen to signal stability as more significant repayments loom, including to the IMF. Analysts are watching for a positive market reaction and potential reserve rebuilding.
President Javier Milei’s administration is keen to send a strong signal to markets, as repayments to bondholders and multilateral lenders rise sharply this year. The next sizable payment, of about $850 million to the International Monetary Fund, is due in February. To help cover the debt, authorities this week secured a one-year repurchase agreement, or repo, with six international banks at a rate of 7.4%. The central bank said it used dollar-denominated local bonds due in 2035 and 2038 (Bonares) as collateral. Analysts say proceeds from the December privatization of four hydroelectric power plants also contributed.
Argentina, a country with a long history of defaults that last missed payments in 2020, faces pressure from markets and the IMF to rebuild reserves as a condition for regaining market access. While country risk remains high, it has dropped sharply to around 560 basis points. Investors are now watching closely to see whether January’s commitments will further compress risk premiums, potentially opening the door for Argentina’s return to international markets. “Now attention shifts to investors’ response once the funds are credited,” said economist Gustavo Ber, adding that a potential “reinvestment effect” could come into play. In December, the central bank launched a program to make reserve building more predictable, buying dollars only when peso demand was strong. This week, it made its first dollar purchase in nine months, securing over $100 million in the foreign exchange market.
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