Stefan Benedetti, Senior Portfolio Manager - Distressed, Stressed and High Yielding Debt at Plenisfer Investments SGR
Argentina’s mid-term elections on October 26 in Argentina reserved a new twist: La Libertad Avanza (LLA), the party led by President Javier Milei, which had suffered a heavy defeat in the Buenos Aires Province elections on September 7, was the top vote-getter nationwide, securing 40.7% of the vote for the Chamber of Deputies and 42.2% for the Senate[1].
Most polls and analysts had expected a setback for LLA, with the “best-case scenario” for Milei seen around 35% of the vote. Yet, against all odds, voters chose to give him more time—likely recognizing that two years are not enough to see tangible results from the restructuring process he has initiated.
The next challenges: reforming a fragile economy
LLA and its allies can now count on a tripled number of deputies and senators—enough to block an impeachment or override a veto repeal, but not sufficient to pass laws independently. Nonetheless, Milei’s renewed political alliances may provide the support he needs to push through key reforms over the next two years.
The real challenge for Milei now is to reform Argentina’s fragile economy so that by the 2027 presidential elections, the average voter can begin to “see the light at the end of the tunnel.”
For decades, Argentina has protected its domestic industry through import tariffs, undermining competitiveness and keeping prices for manufactured goods high. To contain inflation, successive governments have relied on price subsidies, rent controls, and export restrictions—forcing agricultural and mining producers to sell domestically at prices below international levels. The result has been a chronic shortage of foreign currency needed for imports and debt service. In response, the government resorted to capital controls and new public debt, underpinned by the rhetoric of “taxing the rich”—many of whom sought shelter abroad. To break this vicious cycle, Milei began cutting subsidies and reducing public spending, but he could not completely eliminate currency and export controls, which continue to drain dollars.
The new swap line with the United States appears to have eased concerns about a potential liquidity crisis, offering Milei a window of opportunity to lift controls simultaneously—before Washington realizes that doing so could boost Argentina’s soybean exports to China at the expense of U.S. producers.
Opportunities in the Argentine Market
The day after the elections, all Argentine asset prices surged across the board. The rally in sovereign bonds appears justified: the probability of a default or another debt restructuring in 2026–2027 has now decreased significantly. Should this stabilization continue, we may see new sovereign bond issuances in 2026—not only to refinance existing debt but also as a signal of renewed market dynamism.
The rise in corporate bond prices, on the other hand, has been excessive in our view, given the historically compressed levels at which they were already trading. In this context, falling yields could lead to new corporate issuance, and if liberalisation continues, sectors that should benefit include utilities (thanks to increased demand and less regulation) and commodities (due to the ability to sell at international prices).
At Plenisfer, we will continue to monitor Argentina’s economic and political developments and the progress of its reform agenda in order to identify, tactically and selectively, potential new opportunities in both the sovereign and corporate debt markets—with particular attention to individual debt restructuring cases.
[1] Source: Cámara Nacional Electoral https://www.argentina.gob.ar/cne
