S&P Lifts Argentina Credit Rating as Milei Bet on Energy Pays Off

Argentina · Markets

The Argentina credit rating climbed two steps on Wednesday when S&P Global lifted the country to B-, rewarding a hard-won budget surplus and a booming energy sector, even as the grade remains firmly in junk territory.

What the Argentina credit rating upgrade actually means

On Wednesday, June 10, the ratings agency S&P Global raised Argentina’s long- and short-term sovereign credit rating to B- from CCC+, with a stable outlook. For readers who do not follow ratings, the practical meaning is simple. A credit rating is a verdict on how likely a government is to pay back what it borrows. The higher the grade, the cheaper it is for that country, and often its companies, to raise money. Moving up two notches in one decision is a meaningful vote of confidence, and it usually feeds through, over time, into lower borrowing costs.

It is worth being clear about where this leaves Argentina. B- is still deep in what the market calls speculative or junk territory, several rungs below the investment grade that lets a country borrow freely and cheaply. So this is not a return to respectability so much as a steady climb back from the edge of default, where Argentina sat not long ago. The direction of travel, though, is what investors notice, and the direction is up.

Why S&P moved now

The agency pointed to a few concrete improvements. President Javier Milei’s government has run a budget surplus, a rare thing in a country long defined by overspending, and it has done so while bringing inflation down sharply from the extreme levels of two years ago. The central bank has also been buying dollars steadily, building a cushion of reserves that topped $10 billion in the first five months of the year, by S&P’s estimate. That stockpile matters because it is what the government draws on to pay foreign creditors, and a thicker cushion lowers the risk of a missed payment.

S&P also noted that the government has regained access to funding it had lost, through dollar bond sales at home, financing deals with international banks, and guarantees from multilateral lenders. Put together, the agency judged that Argentina is now better placed to cover the large debt payments it faces in 2026 and 2027. It projected the economy growing about 2.7 percent this year and roughly 3 percent annually after that, with average inflation easing toward 30 percent in 2026 from around 31 percent last year.

The energy story behind the numbers

The most striking part of the report was a section devoted to energy. S&P treated Vaca Muerta, the vast shale oil and gas formation in Argentine Patagonia, as a structural reason the country can now pay its way. The agency estimated the sector could deliver an energy trade surplus of around $10 billion this year. For a country that until recently had to spend scarce dollars importing fuel, flipping to a large energy surplus is transformative. Every barrel exported brings in foreign currency that the economy badly needs, and it steadies the trade balance in a way that one good harvest never could.

That shift helps explain a curious thing that happened the same day. Global markets had a rough session, with a worldwide bond selloff and rising tension over Iran pushing investors away from risk. Normally Argentine assets are among the first to fall when the world turns nervous. This time, local bonds largely held their ground. Analysts read that as a sign the country is starting to trade on its own improving story rather than simply following the global mood, with the energy surplus giving it a sturdier footing than in past cycles.

What investors are watching next

The reaction in the market has been to expect a further narrowing of Argentina‘s country risk, the premium investors demand to hold its debt over safer US bonds. A lower premium would let the government and Argentine companies borrow more cheaply, which in turn supports investment and jobs. None of that is guaranteed. S&P’s optimism rests on the government holding the line on spending through a politically charged year, continuing to build reserves, and keeping the energy export machine running. Slip on any of those, and the same agency that just raised the grade could pause or reverse course. For now, though, the message from one of the world’s most-watched ratings firms is that Argentina’s long, painful repair is showing real results.

Frequently Asked Questions

What did S&P change?

It raised Argentina’s sovereign rating to B- from CCC+, a two-notch move, and kept the outlook stable, meaning no further change is expected in the near term.

Is Argentina now a safe place to invest?

Not by the usual measure — B- is still well inside junk territory. The upgrade signals real progress and lower default risk, but the country remains a high-risk, high-reward bet.

Why does energy matter so much to the rating?

Energy exports from Vaca Muerta bring in dollars that help the government pay foreign debt, and S&P projected an energy trade surplus near 10 billion dollars this year, strengthening the case for the upgrade.

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