Argentina Seeks Funding Through Repo Agreements to Address Maturing Debt
Argentina is exploring a financing operation involving repo agreements with international banks to address upcoming debt maturities, Treasury Secretary Pablo Caputo recently confirmed. According to sources familiar with the negotiations, JP Morgan, Bank of America, and Citi are among the banks involved, though Morgan Stanley is not currently part of the scheme.
The proposed formula utilizes a passive repo, where an institution sells a security and agrees to repurchase it at a future date at a predetermined price reflecting an interest rate. This differs from previous operations totaling US$3 billion, which were managed by the Central Bank (BCRA). This time, the Treasury would assume the financial commitment, with the specific guarantee offered by the Economy Ministry still to be persistent.
The operation is being considered alongside other options, including a repurchase of Global 2029 and 2030 bonds potentially involving an exchange for longer-term titles, and the previously announced “debt for education” initiative.Caputo also highlighted the potential use of swaps with China or the USA to cover maturing obligations.
Approximately US$4.2 billion in debt is due in January, broken down as US$3.7 billion held by private investors, US$500 million within the Sustainability Guarantee Fund (FGS) of the Considered (likely referring to a specific investment fund or arrangement), and US$13 million held by the BCRA, according to Romano Group calculations.
Caputo stated that regaining access to financial markets would facilitate reserve accumulation in the coming year, a key concern raised by economists and international banks alongside the current exchange rate policy.The goal is to avoid relying on BCRA currency to cover maturities, a practice that has characterized the early months of the Javier Milei governance.
He emphasized that reserve purchases would be linked to market demand for pesos and the available supply of foreign currency, explicitly stating a rejection of artificially inflating the dollar’s value. Caputo projected potential additions to reserves ranging from US$7 billion to US$21 billion next year, driven by increased demand for pesos and a broader supply of foreign currency.
Recent reports, including those published by THE NATION, indicate that international banks like Barclays and JP Morgan have cautioned about Argentina’s structural weaknesses stemming from low reserve levels. Barclays suggests continued meaningful dollar acquisitions will be necessary, even with debt buybacks and market access. JP Morgan prioritizes reserve accumulation for the Milei government and anticipates a potential return to the markets in the second half of 2026.
