Argentina pauses dollar bond issuance to avoid high interest rates

Argentina's government has strategically halted the issuance of its Bonar 2029 dollar-denominated bond, a move designed to prevent the validation of what it considers excessively high market interest rates. The bond, intended to attract investors seeking higher returns on their dollar holdings, was being offered with a 6% annual interest rate. However, current market conditions, reflected in rising country risk and depressed bond prices, would necessitate offering significantly higher yields, potentially in the double digits, if issuance were to continue. The Ministry of Economy, led by Luis Caputo, opted to pause the Bonar 2029 after it had already placed US$1.226 billion of its US$2 billion total issuance. This decision comes as the government seeks to refinance approximately $12.6 trillion in debt maturing in pesos, focusing on shorter-term instruments with fixed or inflation-indexed rates. Market participants have viewed the pause as a prudent measure, given the current volatility and the government's stated objective of avoiding costly borrowing. The government has indicated that it has already covered a significant portion of its financing needs and is not in a hurry to issue debt at unfavorable rates.

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We already have 60% of the quota covered and we consider that the rates are high. And since there is no hurry at all...