Milei’s FX Reforms Spur Worst Corporate Default Wave Since 2020

(Bloomberg) – Javier Milei’s reforms stable Argentina’s chaotic exchange market and praise investors. However, the revision has been fueling the worst institutional default line since my pandemi.

Local borrowing costs are increasing, especially for peso religious companies, and many of them are struggling with tight cash flows and high debt levels after removing most change control for president Milei individuals.

Since Milei’s changes already caught them in a weak financial position, this year, this year, including the Grupo Albane, it was default or organized or entered or entered. According to Balanz Capital’s Credit and Equality Research President Ezequiel Fernandez, this pressure is expected to continue with balance sheets in sectors such as agriculture, energy and production.

“If the Argentine wants to reverse the page, a certain ‘creative destruction’ level of the micro level should be realized,” Fernandez said. “After all, the regime changes are the winners and those who lose.”

Behind the increase in the defaults is a financing strategy that no longer works. Before Millei, companies took advantage of money controls by issuing bonds in dollars in the local currency, also known as the dollar bond. In doing so, many of them could be locked in negative proportions, as investors wanted to protect against rising inflation and depreciation.

Since Liberter took office, the gap between the official and parallel rates has shrinked and the investor appetite has decreased to these debt tools and forces companies to shoulder the increasing borrowing costs. This new reality pushes more to the troubled region, re -negotiate the conditions of approaching debt payments, or asking shareholders to default to ask for fresh capital.

According to a report from Moody’s ratings, the average interest rates for dollar bonds in the first quarter of 2025 rose to 11% more than 5% seen in the same period last year. In contrast, dollar -linked bond sales fell to only $ 2 million in the first quarter and fell from $ 165 million in 2024 in the same period.

Meanwhile, companies, according to the report, because the average interest rates remained stable at 6%, the previous year, the amount of more than twice the amount of $ 1.1 billion dollars collected.

“In 2025, we have been experiencing the most default since my Pandemi, Mol said José Antonio Molino, a local Argentine director of Moody, a unit of Moody’s. “The dollar -related market almost disappeared.”

The authority has been eight defaults, including abducted payments or restructuring since November. Tally treats three companies in Grupo Albane as a group.

Milhei’s arrest campaign also breaks margins, including the manufacturing sector. Companies are struggling with higher operating costs, reducing the purchase power, and Peso’s leap is increasing from abroad as it extensively values excessive value. The Ministry of Economy of Argentina did not respond to the request for comments.

According to Molino, Moody’s local Argentina scale- typically medium and small companies are currently facing the highest re-financing risks. Within the scale, a A.Ar degree shows the üzerinde above average of credit quality according to other Argentine exporters ve and indicates the upper end of the category.

Molino re-financing risks remain high due to low liquidity for small companies in the local market for the next 12-18 months, Mol said Molino. “We are largely observed from flight to quality in the local market.

Meanwhile, Luis Olguin, Portfolio Manager in William Blair Investment Management in London, said that exporters with access to global markets can probably manage.

“A bifurcation of credit exporters,” he said. “Companies that touch international markets often have a longer history and transparency with international investors.” Since Olguin’s company is currently not exposed to Argentine companies, the yields are very low.

Companies such as YPF, Pampa Energia and Telecom Argentina have successfully touched investors in recent months. The others were not so lucky. In May, two subsidiaries missed an interest payment of $ 19.5 million and triggered the restructuring. Albanesi said in a statement that he analyzed his options, that he plans to present concrete bids in the near term and reached a “reasonable öyle solution.

Again in May, Pulp and Paper Maker Celulosa Argentina SA announced that he would miss payments on local law dollars bonds. In June, the energy company Petrollera Aconcagua Energia said that it restructured its financial debt.

Aconcagua, Vista Energy and Trafigura group due to an agreement with the debt fell in default, he said. In order to prevent the application, both companies have proposed to take over the company, assuming that the debt was restructured and the necessary meticulousness process gives satisfactory results. YPF, PAMPA, Telekom Argentina and Celulosa did not respond to the requests for comments.

Fernandez from Balanz, “Most of the default companies, FX controls, already borrowed in times of borrowed,” he said.

-Help from the Ignacio Olivera Doll.

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