Argentina pays US swap line, bondholders in boost for Milei

Argentina has fully repaid the US$2.5 billion it drew down from a US$20-billion swap line with the Trump administration while also making key payments to bondholders.

US Treasury Secretary Scott Bessent confirmed Friday that Javier Milei’s government “quickly and fully” repaid a portion of the swap. While he didn’t detail any figures, the US Treasury disclosed the amount drawn down in its most recent report on the Exchange Stabilization Fund. As a result, Bessent added, the US no longer holds pesos in its ESF. 

“Our nation has been fully repaid while making tens of millions in USD profit for the American taxpayer,” Bessent said in a post on X. “Argentina has successfully re-accessed financial markets and has made encouraging changes to its monetary and exchange rate policy framework.”

Argentina also made a US$4.3-billion payment on its global bonds, having secured a US$3-billion loan from six international banks earlier this week. The payment was confirmed by Argentina’s financial regulator, with a spokesperson saying local holders have their money and international ones would receive their funds Monday.

The crisis-prone South American nation’s sovereign bonds rose across the curve. Global notes due in 2035, some of the most liquid, gaining 0.6 cent to trade at about 74.5 cents on the dollar; the yield edged down to 9.8 percent.

Starting in September, Bessent rescued Milei’s government while it was enduring market volatility in the run-up to Argentina’s midterm elections in late October, providing a level of US financial support not seen in Latin America for decades. Milei’s libertarian party prevailed in the vote and market outlook has since swung back to the president’s favour. 

The US Treasury and Argentina have provided little information about the swap line or its conditions.

Meanwhile, the so-called repo loan – led by Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA and Deutsche Bank AG – was a one-year facility at an average rate of 7.4 percent. Milei’s government turned over nearly US$5 billion in local bonds due in 2035 and 2038 as collateral in exchange for the US$3 billion in cash. Economy Minister Luis Caputo said in December that a repo line was available for Argentina, boosting confidence the January 9 payment would be made.

Caputo has emphasised the need to restore market access to support reserve accumulation, one of investors’ long-standing concerns. He has said that while the Milei administration has successfully bought dollars, the inability to refinance maturities has forced the government to rely largely on its own resources to meet debt obligations, preventing the Central Bank from meaningfully rebuilding its stock of hard-currency reserves.

A US$1-billion local-law debt issuance in December was widely seen as a first step toward a global bond sale, especially as country risk now sits at the lowest in about seven years. 

Argentina faces a similar US$4.3 billion bill in six months time. Investors expect the government to have secured international market access by then, easing concerns about repayment capacity. In December, the administration also announced changes to its currency policy that allow the Argentine peso to trade more freely within a faster-widening band, along with a reserve-accumulation programme targeting US$10 billion this year.