Quick View: Big win for Argentina’s Milei paves way for policy continuity and reform
Portfolio Manager Thomas Haugaard discusses what President Javier Milei’s mid-term election victory means for Argentina's credit trajectory.
4 minute read
Key takeaways:
- President Javier Milei’s coalition, La Libertad Avanza (LLA), secured a resounding national election victory, capturing nearly 41% of the vote and winning in 16 out of 24 provinces – including a pivotal turnaround in Buenos Aires, consolidating his political position.
- Milei pledges the most reformist Congress in Argentina’s history, with the mandate to pursue deep structural changes in taxation, labour, pensions and beyond. With broader congressional representation and US backing, Argentina enters a window for transformation.
- The last two months have seen significant volatility in Argentina bond prices in both directions, underscoring our approach to take a medium-term view on sovereign credit risk.
Landslide victory for Milei
After a month of political uncertainty and market volatility resulting in the US offering unprecedented support to Argentina in the last few weeks, President Javier Milei emerged victorious in the national election with a better-than-expected margin of victory. Argentinian assets have reacted very positively to the result, with USD sovereign bonds up 12pts and peso rallying +5.5% at the time of writing.1
At the national level, his LLA party captured 40.8% of the vote, decisively outpacing the Kirchnerist opposition Fuerza Patria and allies, which secured 31.6%. This included victories in 16 provinces including Cordoba, Santa Fe, Mendoza, the city of Buenos Aires, and a dramatic turnaround in the province of Buenos Aires (which he lost in regionals last month). The voter turnout was low (the lowest since the return to democracy), with only about 68% of registered voters casting ballots,2 which underscores the polarised mood of the electorate.
The electoral outcome strengthens Milei’s hand – he and his allies will exceed one-third of both chambers, securing veto protection and eliminating impeachment risks while giving him greater authority to wield the presidential veto. The ability to maintain presidential vetos in both chambers is a key positive and markets welcome this safeguard as a worst-case governance lever.
The numbers also underscore the need for alliance-building between parties for policymaking: LLA and its ally PRO (Propuesta Republicana or Republican Proposal) command around 108 Lower House seats, short of the 129 needed for majority; they need the support of the roughly 28 moderate provincial representatives.
What Milei’s mid-term election win means for Argentina’s credit trajectory
Milei celebrated the win and delivered a measured, conciliatory speech inviting governors and other forces to join in dialogue and national agreements. As a result of his victory, governability is strengthened and reform momentum could be accelerated in Argentina, with critical structural changes in taxation, labour, pensions and more now look likely, particularly if the 2026 Budget secures congressional approval.
The consolidation of Milei’s LLA, together with allies, exceeding 40% of the vote, almost eliminates any middle-ground alternative, making 2027 an election that will most likely be polarised between Milei and Peronism. If the economy and macro indicators stay favourable over the next two years, Milei will likely remain the frontrunner for 2027 to the benefit of Argentina’s credit profile.
US support is expected to provide an important backstop; that backing should reduce Argentina’s political risk premium sharply, giving the central bank room to ease monetary conditions and normalise FX (currency) reserve requirements. Plans to extend the FX bands and progressively move toward a floating exchange rate in 2026 could be unlocked.
As the administration steers forward, bridging the divide between pro-market governors and entrenched Peronist factions while remaining true to Milei’s mandate will determine whether a virtuous cycle of reforms can be realised.
1 Source: Bloomberg as of 27 October 2025.
2 Source: Goldman Sachs Global Investment Research, 27 October 2025.
Fiscal/Fiscal policy: Describes government policy relating to setting tax rates and spending levels. Fiscal policy is separate from monetary policy, which is typically set by a central bank. Fiscal austerity refers to raising taxes and/or cutting spending in an attempt to reduce government debt. Fiscal expansion (or ‘stimulus’) refers to an increase in government spending and/or a reduction in taxes.
FX reserves are a country’s foreign-currency assets, like foreign banknotes and bonds, held by its central bank to back its liabilities, support international trade, and act as a buffer against economic crises. These reserves help a central bank intervene in the foreign exchange market to influence the national currency’s value, pay for imports, and provide liquidity during times of financial stress.
FX bands: These refer to a monetary regulation where a country’s central bank manages its currency’s exchange rate by allowing it to fluctuate within a defined range, or “band,” around a central rate.
Floating exchange rate: A system where a currency’s value moves up or down depending on international demand and the amount of confidence in its country’s economy.
Monetary policy: The policies of a central bank, aimed at influencing the level of inflation and growth in an economy. Monetary policy tools include setting interest rates and controlling the supply of money. Monetary stimulus refers to a central bank increasing the supply of money and lowering borrowing costs. Monetary tightening refers to central bank activity aimed at curbing inflation and slowing down growth in the economy by raising interest rates and reducing the supply of money. See also fiscal policy.
Risk premium: The additional return an investment is expected to provide in excess of the risk-free rate. The riskier an asset is deemed to be, the higher its risk premium to compensate investors for the additional risk.
Volatility measures risk using the dispersion of returns for a given investment.
IMPORTANT INFORMATION
Emerging market investments have historically been subject to significant gains and/or losses. As such, returns may be subject to volatility.
Sovereign debt securities are subject to the additional risk that, under some political, diplomatic, social or economic circumstances, some developing countries that issue lower quality debt securities may be unable or unwilling to make principal or interest payments as they come due.
Fixed income securities are subject to interest rate, inflation, credit and default risk. The bond market is volatile. As interest rates rise, bond prices usually fall, and vice versa. The return of principal is not guaranteed, and prices may decline if an issuer fails to make timely payments or its credit strength weakens.
Foreign securities are subject to additional risks including currency fluctuations, political and economic uncertainty, increased volatility, lower liquidity and differing financial and information reporting standards, all of which are magnified in emerging markets.
These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
There is no guarantee that past trends will continue, or forecasts will be realised.
Marketing Communication.
4 minute read
Key takeaways:
- President Javier Milei’s coalition, La Libertad Avanza (LLA), secured a resounding national election victory, capturing nearly 41% of the vote and winning in 16 out of 24 provinces – including a pivotal turnaround in Buenos Aires, consolidating his political position.
- Milei pledges the most reformist Congress in Argentina’s history, with the mandate to pursue deep structural changes in taxation, labour, pensions and beyond. With broader congressional representation and US backing, Argentina enters a window for transformation.
- The last two months have seen significant volatility in Argentina bond prices in both directions, underscoring our approach to take a medium-term view on sovereign credit risk.
