Payden & Rygel: US support for Argentina

Payden & Rygel: US support for Argentina

26 september 2025

Opkomende markten Verenigde Staten

By Alexis Roach, Emerging Markets Sovereign Analyst, Payden & Rygel

In the near term, we see the US support for Arentina as a strongly positive development through the October 26th mid-term elections. While we seek clarity on the timing of the support and its exact size (information has been partial), the Bessent statements were very strongly worded and open-ended. This makes the degree of the US’s commitment to Argentina clear.  In our view, this serves as a bridge for the Milei administration to navigate the midterms with a reduced risk of further financial market disruption.

In the midterms, investors would like to see Milei's party register a strong showing on a national level. However, given less bullish expectations about Milei’s electoral prospects (in the wake of the Province of Buenos Aires September elections) and the fact that liquidity constraints are less pressing due to US support, we do not think that Milei’s party will have to win a landslide victory to achieve governability. In our view, a reasonable election, whereby Milei’s party beats the Peronists, would be sufficient.

Financial assistance from the US is very helpful. However, it is not sufficient to anchor the medium-term country investment case. Post midterms, we will focus on whether the government can reach agreements with centrist political forces to achieve governability vis-à-vis the Congress. Just as importantly, Argentina should position itself to regain market access, even if this is not a binding constraint due to US support. In this connection, we would like to see a policy shift that allows for the Central Bank (BCRA) to accumulate international reserves aggressively. This should translate into changing the monetary framework to allow for more currency flexibility.

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