Argentina’s Bonds Collapse as Country Risk Surges Past 1,300 Points

Argentina’s sovereign bonds suffered another sharp sell-off this week, pushing the country’s risk premium above 1,300 basis points and deepening concerns about the Milei government’s economic and political stability.

JPMorgan’s EMBI+ index, the benchmark for emerging-market credit risk, had already closed on September 17 at 1,246 points, the highest level in nearly a year.

By Thursday trading, bond losses widened, sending the spread to around 1,337 points, with some market monitors later quoting levels above 1,400.

Dollar-denominated bonds under New York law lost between 3% and 6% in a single session, led by issues such as GD38 and GD41.

Prices of locally issued bonds, including the widely traded AL30D, fell below US$50, signaling market expectations of default-like valuations.

Argentine equities followed the same path, with flagship companies such as YPF and Grupo Financiero Galicia sliding on Wall Street. The Merval index, measured in liquid dollars, has retreated from near 2,500 points at the start of the year to barely half that level.

The sell-off reflects mounting doubts about the government’s ability to manage debt obligations and maintain investor confidence.

President Javier Milei, who had argued that country risk below 550 would reopen access to global credit, now faces the opposite scenario.

Recent defeats in Congress, including the rejection of presidential vetoes, have highlighted the administration’s fragile political base. Currency tensions add to the picture.

The financial dollar, measured through the contado con liqui, climbed above 1,520 pesos, while the MEP dollar traded near 1,510. The Central Bank has been forced to intervene to defend the peso, putting additional pressure on scarce foreign-exchange reserves.

Regional comparisons underline Argentina’s vulnerability. Ecuador, which tracked similar risk levels a year ago, currently trades near 700 basis points—roughly half of Argentina’s spread. That gap reflects how investors now treat Argentina as one of the riskiest emerging markets.

The consequences are immediate: higher borrowing costs, reduced access to credit, capital flight, and the likelihood of deeper austerity. For households, this translates into inflationary pressures, weaker savings, and more fragile employment prospects.

Once hailed by markets for its reformist rhetoric, Milei’s administration is now confronting the reality that without political backing and financial stability, Argentina’s return to global markets is drifting further out of reach.