U.S. banks JPMorgan Chase, Bank of America, and Citigroup have decided to cancel a proposed loan of US$20 billion to Argentina. Instead, bankers are deliberating on a new, short-term credit facility that is one-quarter the size. Minister Luis Caputo refuted any claims of having discussed a bailout with banks, asserting that the reports are intended to “spread confusion.” Last month, reports surfaced regarding a bailout amounting to US$20 billion, as U.S. Treasury Secretary Scott Bessent informed journalists of the private sector’s intentions to invest in Argentina’s sovereign debt. Previously, the U.S. had arranged for a $20 billion currency swap for Javier Milei’s administration, indicating that the total aid package would have amounted to $40 billion. “It is a private sector solution to Argentina’s upcoming debt payments,” Bessent stated to the media in October, prior to the midterm elections. “We have indeed been engaged in this endeavor for several weeks.” Bankers are now indicating that it is “no longer under serious consideration,” according to a report.
A representative from Argentina’s economy ministry has yet to provide a response to the Herald’s inquiry. In response to an inquiry from an X user who shared the article and expressed confusion with “What the [expletive] is this?,” Economy Minister Luis Caputo acknowledged the question by stating, “Excellent question.” He subsequently clarified that the government “never discussed a bailout with the banks, not about 20 billion.” It is merely another ‘operation’ designed exclusively to generate ambiguity. Last month, Bessent noted a US$20 billion facility, stating that “many banks are interested in it and many sovereign funds have expressed interest in it.” In a subsequent interview following Bessent’s comments, Caputo stated, “we are working in another US$20 billion facility” in addition to the U.S. currency swap.
Reports says that bankers have opted to provide a “smaller, short-term loan package” to assist the financially distressed government. This new loan may be a $5 billion repurchase agreement, also referred to as a “repo” facility. Under the arrangement, Argentina would swap a portfolio of bonds for dollars from the banks. Argentina would subsequently utilize the credit to settle an impending debt obligation of approximately US$4 billion due in January, as per reported. Milei’s administration would subsequently collaborate with financial institutions to incur new debt and repay the repo facility “likely within months.” Nevertheless, discussions remain in preliminary phases and “could change or fall apart.”
The U.S. Treasury provided support to Argentina by selling dollars in the foreign exchange market prior to the midterm elections on October 26, in response to a currency run against the peso. The exact figure remains undisclosed; however, market analysts estimate that the Trump administration expended significantly more than US$2 billion within a span of two weeks. Last week, U.S. Treasury Secretary Scott Bessent confirmed that Argentina had activated the currency swap offered by the previous administration. The announcement concluded a period of speculation, with local economists contending that the event had already transpired, despite the absence of confirmation from local authorities. Analysts speculated that the currency swap, which involves new debt for Argentina, was utilized to repay the dollars that the U.S. sold to mitigate the pre-electoral pressure on the peso.