According to a source, Argentina’s Treasury is gathering greenbacks in preparation for a big bond payment that is due this week. These greenbacks are being acquired by the Treasury in order to acquire dollars that are entering the local market thanks to the privatization of hydroelectric power facilities. According to a source, the Treasury Department was able to buy more than half of the earnings from the US$700 million privatization on Monday alone. These transactions were referred to as block trades and took place outside of the official market.
When January 9 rolls around, Argentina will be required to make a payment of $4.3 billion in principle and interest. There is a sense of confidence among bond investors over the next payment. According to statistics, debt that is due to mature in 2030 is presently trading at around 85.5 cents on the US dollar. There is still a lack of clarity over whether or not the Treasury Department is capable of independently amassing sufficient dollars to meet the payment, or whether or not it will be required to tap the foreign reserves held by the central bank.
Economy Minister Luis Caputo has a number of choices available to him in order to collect the remaining monies. These possibilities include entering into a buyback agreement with US banks, which is basically a loan, or making use of Argentina’s twenty billion dollar swap line with the United States Treasury Department. At the moment, Caputo has reduced the likelihood of releasing bonds inside the foreign market throughout the month of January. Caputo performed a debt exchange with the Central Bank last week, which was a component of the government’s earlier repos with financial institutions. These procedures were taken by the Argentine authorities in order to effectuate a repurchase agreement.
As indicated in an official release, the Central Bank carried out its first dollar buy in nine months on Monday, purchasing twenty-one million dollars U.S. dollars from the foreign exchange market. For the purpose of responding to requests from the markets and the International Monetary Fund, the authority had earlier declared its intention to begin the process of reserve building beginning in the year 2026.