Argentina’s government does not plan to return to international debt markets despite a sharp fall in country risk, Economy Minister Luis Caputo revealed, signalling a continued strategy of avoiding sovereign bond issuance even as financing conditions improve, MDZ reported.

Speaking to Radio Mitre on February 2, Caputo said the administration had “no intention” of issuing bonds abroad to refinance debt maturities due this year, contradicting market speculation that the government might seek funding on Wall Street.

Argentina’s country risk index recently fell below 500 basis points for the first time since 2018, reflecting improved investor sentiment buoyed by the market-friendly reforms spearheaded by President Javier Milei. However, Caputo said the government’s priority remained reducing reliance on external borrowing rather than taking advantage of lower spreads.

The minister said Argentina had historically run fiscal deficits for most of its modern history, which meant credit from both domestic and international markets was largely absorbed by the state, limiting access to financing for the private sector. He pointed out that the current policy marked a shift towards what he described as a “crowding in” effect.

“This is the first time the opposite effect has occurred,” Caputo said, adding that as the government repays debt and refrains from issuing new bonds, investors are redirecting funds into corporate and provincial debt.

According to Caputo, Argentina paid $4.2bn to investors, which was followed by a surge in debt issuance by companies and provincial governments. He said firms were seeking financing to expand production, which in turn supported employment and wages.

Despite avoiding international markets, Argentina still faces sizeable foreign-currency obligations. Consultancy Invecq estimates that the country must meet around $18bn in dollar-denominated debt maturities over the remainder of the year.

Debt issuance by provinces has increased since last October’s legislative elections, with total subnational and corporate placements reaching $9.3bn. Recent deals include bond sales by Córdoba and Santa Fe for $800mn each, and a $600mn issuance by the city of Buenos Aires, all priced at yields above 8%.

Corporate bond issuance has also gathered pace. Telecom raised $600mn at an 8.6% yield, while Pan American Energy issued $375mn at 7.9%. Since October, companies have placed $6.4bn in debt, although the central bank said around $3.6bn has yet to be settled.

Caputo reiterated that the government aims to maintain its current approach while it can secure alternative sources of financing at lower costs, reinforcing its broader goal of reducing Argentina’s dependence on international capital markets.