By Leila Miller and Rodrigo Campos
BUENOS AIRES (Reuters) -Argentina's international dollar bonds fell on Monday as corruption allegations threatened to embroil figures close to President Javier Milei, with the 2038 issue down over 4 cents.
Local media published audio recordings last week in which a voice that sounds like that of then-head of the disability agency, Diego Spagnuolo, can be heard discussing bribery within the agency. He alludes to Karina Milei, the president's sister and chief of staff,
as receiving bribery payments.
Spagnuolo was later fired by the president. Government officials have not confirmed the authenticity of the audio and Milei has not commented publicly on the issue. His sister has also made no public comment.
Cabinet chief Guillermo Francos has said that, according to Milei, Spagnuolo had never mentioned the alleged bribery.
Opposition legislators on Monday called for the chief of Argentina's health ministry, which oversees the disability agency, to answer questions about the matter in Congress.
Late on Friday, various properties including Spagnuolo's residence were raided as part of a government investigation.
The 2038 note fell 4.1 cents on Monday to 65.71 cents on the dollar, its lowest level in over four months according to LSEG data. The 2041 issue also fell over 4 cents.
Argentina's stock market benchmark fell more than 3% on Monday following a 3.8% decline last week. The peso was down over 2% against the U.S. dollar.
Marcelo Garcia, director for the Americas at New York-based risk consultancy Horizon Engage, said foreign investors worry a potential decline in Milei’s popularity would get in the way of his economic agenda.
“It affects the government’s capacity to be reputable enough to continue to introduce tough reform in the next two years,” Garcia said. “The Milei political strategy of continued confrontation with everyone requires him to be very popular.”
Garcia said the disability bribery scandal is particularly sensitive because it hits at the stigma that Milei "doesn’t care for the weak and the poor.”
A spokesperson for Milei's government did not respond to a request for comment.
The allegations come weeks ahead of a key local election in the Buenos Aires province and national midterm elections in October, where Milei's party is hoping to increase its presence in the opposition-controlled Congress.
The libertarian president's popularity has been resilient even as his policies forced spending cuts and initially increased poverty levels across the country.
(Reporting by Rodrigo Campos and Leila Miller; Editing by Chizu Nomiyama, Helen Popper and Chris Reese)
