MercoPress. South Atlantic News Agency

Argentina: Dollar keeps falling after new debt plan announcement

Caputo announced the issuance of new dollar-denominated bonds

Argentina's official exchange rate and key financial dollar segments registered declines on Friday, after Economy Minister Luis 'Toto' Caputo announced plans for a new dollar-denominated bond issuance aimed at refinancing maturities and strengthening foreign currency reserves.'

The market reaction, which saw the dollar lose ground and local assets stabilize, was triggered by Caputo's early-morning statement regarding the placement of a new dollar bond maturing in 2029.

The wholesale exchange rate, which is closely managed by the Central Bank (BCRA), dropped AR$9 to close at AR$1,435 per US$1, marking its third consecutive decline, ending the week at its lowest level since November 21. The retail dollar, averaged across various financial institutions, closed at $1,462.75. In contrast, the unofficial or “blue” dollar ended the day at $1,430 for sale, having briefly traded higher in the morning. The official “card” or tourist dollar for transactions abroad stood at $1,898, factoring in the 30% tax surcharge.

Minister Caputo confirmed the government will tender a new four-year, local-law dollar bond with a 6.5% semi-annual coupon (TNA). Market analysts suggest that if the government successfully raises between US$1.2 billion and US$1.5 billion next week, it would be considered a strong result.

The announcement improved overall financial sentiment, with the market viewing the debt strategy as a pathway to greater foreign currency availability. The government also confirmed that an offer for a potential US$7 billion operation with banks remains on the table, which, combined with a current US$20 billion swap with the US Treasury, would significantly cover next year's financing needs.

Sovereign bonds saw mixed results, though bonds under foreign law generally advanced around 1%, further dwindling the Country Risk index to approximately 623 basis points.

In the stock market, ADRs (Argentine shares traded in New York) generally performed positively, with Loma Negra notably gaining 2.3%. However, local equities on the Buenos Aires Stock Exchange (Merval) recorded slight declines in peso terms. Shares of local companies like Edenor (-2.6%), Grupo Supervielle (-2.3%), and Telecom (-1.5%) were among the leading decliners on Wall Street.