Argentina’s bond market feels the sting of a plunging presidential popularity. Milei’s approval fell to 35.5% in April, a sharp drop from 44% at the year's start, sparking renewed concern among investors. The shift has pushed 2028 local‑law dollar notes to a yield of 8.3%, up 360 basis points from 2027 levels.

The spike reflects fears that Milei’s radical reforms may falter before the next election, pushing the country toward a Kuka‑style populist mix of tighter controls and higher spending. Alejo Costa of Max Capital warns that the 2028 bond is dragged by this electoral risk, while inflation‑linked peso bonds have seen their yields climb from 5.5% to 7.9%.

Credit default swap data now show a 5% chance of default within a year, rising to nearly 60% over a decade. Investors, wary of a policy reversal, demand higher compensation for longer‑dated debt, tightening liquidity and increasing funding costs across Argentina’s sovereign market.

The market’s reaction underscores the fragile balance between Milei’s economic agenda and public confidence, with immediate implications for borrowing costs and foreign investment flows.