Argentina Bonds Are Still A Good Investment

Emerging Markets International Trader Argentina’s Economy Stumbles. Its Bonds Are Still Attractive. By Craig Mellow Follow Oct 01, 2026, 3:00 am EDT Gift Article Listen (4 min) President of Argentina Javier Milei addressed the United Nations General Assembly in New York last month. (Alexi J. Rosenfeld/Getty Images) Key Points About This Summary Argentine President Javier Milei is losing momentum a year before his re-election bid, with his approval rating dropping. Argentina’s annual inflation rate is stuck around 30%, poverty is increasing, real wages are stagnant and unemployment is rising. Despite the economic challenges, some investment managers view Argentine bonds as potentially attractive due to the country’s fiscal situation. Argentine President Javier Milei is losing momentum a year before his bid for re-election. Luckily for him and bondholders, his Peronist opponents are stuck in reverse. The libertarian firebrand, in office since December 2023, achieved global celebrity as his shock therapy whipped near-hyperinflation and doubled currency reserves in the world’s most-defaulting nation. But he has largely squandered a political boost he got from successful 2025 midterm elections. Advertisement - Scroll to Continue At home, Milei’s drawn-out defense of cabinet chief Manuel Adorni against corruption allegations left vital structural reforms of taxation and pensions to languish. “The Adorni scandal consumed way too much oxygen,” says Bruno Binetti, a fellow at Chatham House. Adorni stepped down in late June. Abroad, Milei’s administration whiffed on a chance to re-enter bond markets before the summer surge in global yields. “If they didn’t want to issue at 9%, they won’t come to market now at 11%,” says Jeff Grills, head of emerging markets debt at Aegon Asset Management. That has left the economy to drift in the wrong direction for most of Argentina’s 46 million citizens. Inflation is stuck around a still-punishing 30% annual rate. Poverty is increasing again after a sharp contraction in Milei’s first two years. This year’s 2% to 3% economic growth is concentrated where jobs aren’t, in oil and mining exploration and agriculture. “Real wages are stagnant and unemployment is rising,” summarizes Thierry Larose, portfolio manager for emerging markets local debt at Vontobel Asset Management. Milei’s poll numbers have dropped accordingly, with voters disapproving of his stewardship by a 60-to-40 margin, according to pollster AtlasIntel. So have bond prices. Benchmark paper maturing in 2038 has fallen from 83 cents on the dollar to 74 cents over the past two months. Advertisement - Scroll to Continue Argentines may well see the alternative as worse when they cast ballots in October 2027, though. Peronism’s leading lights, former President Cristina Kirchner and Buenos Aires Province Governor Axel Kicillof, have feuded with each other and rehashed the disastrous policy prescriptions that ushered Milei into power. “The Peronists are very nostalgic about a golden age that disappeared more than 15 years ago,” Binetti says. “With the information we have today, continuity is more likely than change” next year, says Alejo Czerwonko, chief investment officer for emerging markets at UBS Global Wealth Management. On that assumption, Argentine bonds are a buy. “They are trading at a steep premium over other B-rated credits despite one of healthiest fiscal situations on the planet,” Czerwonko argues. Aegon’s Grills is a tad more cautious, seeing Argentine credit as “not too far from an entry point.” Yields are near, if not at the top of, the emerging market charts, paying a percentage point more than neighboring Ecuador and nearly as much as Gabon, he notes. Vontobel’s Larose considers “the outlook for Argentine bonds as challenging but potentially attractive.” Advertisement - Scroll to Continue Stagnation might get incumbents thrown out in other countries. In Argentina, it is something of an achievement compared with past chaos and contraction. “Milei is delivering a modicum of stability in the ultimate boom-and-bust economy,” Czerwonko says. He has powerful friends to buttress that stability if necessary, at the International Monetary Fund and the U.S. Treasury, which opened a $20 billion credit line to Buenos Aires to fortify the peso before last year’s midterms. Milei’s reforms could still fail, like those of Mauricio Macri before him. But investors may be getting paid adequately for that risk. Write to editors@barrons.com