Argentina’s Milei Reforms: Why Corporate Defaults Are Surging in 2025

Argentina’s president, Javier Milei, has pushed through sweeping economic reforms that are reshaping the country’s financial landscape in 2025.

His main goals are to restore fiscal stability, curb the chronic inflation that topped 200% in late 2023, and close the gap between official and unofficial peso-dollar exchange rates.

The changes have won praise from international lenders such as the IMF after inflation fell below 30% and the currency market stabilized. But behind those headline improvements, many Argentine companies are struggling with a much tougher financial reality.

For years, firms took advantage of strict currency controls by issuing “dollar-linked” bonds—debts pegged to the US dollar but paid off in pesos—often at rates that were effectively negative due to inflation and currency distortions.

This financial shortcut vanished when Milei removed most controls, ending the dual exchange rates that made the tactic so profitable. The market for dollar-linked bonds has since collapsed.

New issuance plunged from $165 million in early 2024 to only $2 million a year later, while average interest rates on them more than doubled from 5% to 11%.

Many companies now face higher borrowing costs and fewer financing options, especially smaller and mid-sized firms with weaker credit ratings.

Argentina Sees Fiscal Surplus Amid Rising Corporate Defaults

Since late 2024, at least eight significant corporate defaults or restructurings have occurred, the highest number since the pandemic.

Utilities group Grupo Albanesi, pulp and paper maker Celulosa Argentina, and energy firm Petrolera Aconcagua Energía are among those in trouble.

Lower government subsidies, high operating costs, and an overvalued peso have eroded profit margins, hitting manufacturing, agriculture, and energy the hardest.

Larger corporations with access to international debt markets—such as YPF, Pampa Energía, and Telecom Argentina—have managed to raise capital abroad at relatively stable rates of around 6%. Yet even these companies face pressure.

Telecom Argentina, for example, posted a 44% revenue increase but still reported a loss and saw its net financial debt jump 38%.

From a macroeconomic perspective, Milei’s approach is delivering results: Argentina recorded a primary fiscal surplus equal to 1.8% of GDP in 2024, the first in over a decade, and is aiming for a balanced budget in 2025.

International bond sales reached $1.1 billion in the first quarter of 2025, more than double the amount a year earlier. The story behind the story is that the reforms are a double-edged sword—restoring national finances while forcing a wave of painful corporate adjustments.

The government’s bet is that disciplined fiscal policy will attract lasting investment and end Argentina’s cycle of crisis. But for many local businesses, the transition means finding new ways to survive without the protection, credit tricks, and subsidies that once kept them afloat.

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