Argentina dollar bonds hit record highs as Milei rally powers on

Argentina’s dollar-denominated international bonds were set to post another week of gains on Friday, with the 2029 and 2030 issues close to or at record high prices.

The bonds have rallied from lows that took the 2030 issue to 18.125 cents in mid-July 2022, fueled by investor bets that the administration of President Javier Milei, in power since December, will be able to successfully transform the Argentine economy.

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At the index level (.JPMEGDARGR), opens new tab, Argentina’s bonds have gained some 60% since Milei was elected on Nov. 19.

“Despite the strong move over the last few sessions and the potential volatility around the ongoing political negotiations, we think newly established levels can be consolidated,” wrote JPMorgan analysts earlier this week.

Milei has made austerity a focus since taking office, helping the country post its first monthly fiscal surplus for over a decade in January. Investors are pleased but cash-strapped regional governors and poverty-weary unions threaten a fragile balance.

“There are plenty of political challenges and execution risks, but there appears to be a path to a political agreement, said JPMorgan, adding that further assistance from the International Monetary Fund could help extend the rally.

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The South American grains exporter issued six new U.S.-dollar Eurobonds in September 2020, with maturities set for 2029, 2030, 2035, 2038, 2041 and 2046, as part of the restructuring of some $65 billion in debt owed to bondholders. Six euro-denominated bonds with the same maturities were also issued.

The dollar bonds have traded lower than their initial price since the second half of September 2020, if not since inception, according to LSEG Datastream data.
The new bonds replaced a batch that included some recently issued bonds together with a 100-year note maturing in 2117.

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