The national government is launching an unprecedented placement of debt in pesos to strengthen reserves before July.

The Ministry of Economy will move forward this Wednesday with an unprecedented issue of peso-denominated debt aimed at foreign investors, with a specific objective: to accumulate dollar reserves to cover the significant debt maturities the Treasury will face in early July.

The transaction, which includes the placement of the Bond 2030, will allow buyers to subscribe to the security in foreign currency, even though the bond is denominated in pesos. The issue aims to incorporate nearly USD 1 billion in foreign currency into the Central Bank 's balance sheet , in a context in which the exchange rate remains far from the intervention floor of the floating band.

With the beginning of July, one of the most demanding financial commitments of the year approaches: the national Treasury must face payments of USD 4.5 billion in principal and interest, mostly corresponding to privately held bonds . The official strategy is to build a reserve cushion to guarantee compliance with these commitments without putting pressure on the foreign exchange market.

"This issue does not seek to intervene in the band, but rather to strengthen the reserve position through the capital account," official sources explained. The decision is part of a broader scheme that includes agreements with banks to finance themselves through repos and boost private placements of companies abroad.

Dollar-denominated government bonds reacted yesterday with increases of up to 1.5%, especially those with longer maturities, in a sign of support for the new instrument. For investors, the government's diversification of financing sources without resorting to the Central Bank improves debt sustainability and expectations regarding future payment compliance.

With country risk still hovering around 650 basis points, access to dollar markets remains limited. However, this peso-denominated auction, with revenues via dollars, represents an alternative to further narrowing the sovereign spread.

Although the final outcome of the bidding process is still unknown, an estimated range for the cut-off rate has already begun to circulate in chats between traders and banks: between 20% and 25% annually in pesos. This is a significantly lower yield than the LECAP, which exceeds 40% nominal annual yield.

The difference is due to the fact that this bond is designed for foreign investors, but it also reflects inflation expectations: according to the latest BCRA surveys, price increases could slow to single-digit annual levels by the end of 2025.