Argentina makes US$4.3 billion debt payment

The Argentine government has made its first major debt repayment of the year, consisting of US$4.3 billion in Global and Bonares bonds. Fridays payment to bondholders was made with deposits from the Treasury, proceeds from the privatization of dams, and a US$3 billion repo with international banks announced on Wednesday, Economy Minister Luis Caputo confirmed in an X post. After the payment, Global bonds (under foreign law) and Bonares bonds (under Argentine law) edged up by 0.7%. JP Morgan’s country risk index for Argentina fell by eight basis points to 567. Friday’s maturity is part of the debt restructuring calendar established in 2020 by then-Economy Minister Martn Guzmn. According to Guzmn and independent consultants, the negotiation provided financial relief exceeding US$37 billion for the period 2020-2030. On Wednesday, Economy Minister Luis Caputo said on X that, by taking US$3 billion to pay off US$4.2 billion, the government had reduced its debt, but this was disputed by several economists. Caputo also accused the Kirchnerist administrations of increasing Argentinas debt. According to Fernando Morra, Guzmns former vice minister, Milei’s government has increased foreign debt despite running a fiscal surplus. He said the economic program, including the new exchange rate regime, continues to generate more doubts than certainties. Morra, who participated in the 2020 debt restructuring, said the idea at the time was to accumulate reserves by the time this maturity date arrived, and that the administration would not need a repo to pay it back.  We are now in a macroeconomic scenario that does not have the conditions we thought at the time would be required for debt sustainability, he told the Herald.  “What we thought was needed [in order] to be in a position to access the markets and roll over the debt on sustainable terms was not done, or could not be done, Morra said.  Today, the government refuses to consider alternatives, but there are clear signs that the financial program is not viable. The only thing that can keep it alive is another bailout from the International Monetary Fund (IMF), which, given the state of international politics, seems the most likely outcome, he concluded. The next tranche of debt, a similar amount to Fridays payment, matures in July.