Argentina’s Treasury is buying dollars entering the local market from the privatisation of hydroelectric power plants, amassing greenbacks ahead of a key payment on its bonds due this week, according to a person familiar with the matter.
On Monday alone, the Treasury bought more than half of the proceeds from the US$700 million privatisation through transactions known as block trades outside the official market, the person said, asking not to be identified because the information is private.
Argentina has US$4.3 billion due in principal and interest on January 9. Bond investors are optimistic that the payment will be made: debt maturing in 2030 trades at around 85.5 cents on the US dollar, according to data compiled by Bloomberg. What’s been less clear is whether the Treasury would be able to cobble together enough dollars on its own to make the payment or would have to tap the central bank’s foreign reserves.
Economy Minister Luis Caputo’s options to scrape together the remaining funds include a possible repurchase agreement – effectively a loan – with Wall Street banks, or tapping Argentina’s US$20-billion swap line with the US Treasury Department. For now, Caputo has downplayed the likelihood of selling bonds abroad in January.
Last week, Argentine authorities took steps to prepare for a repurchase agreement, with Caputo executing a debt swap with the Central Bank – one element of the government’s previous repos with banks.
On Monday, the Central Bank made its first dollar purchase in nine months, buying US$21 million in the foreign-exchange market, according to an official statement. The authority had already publicly said it would begin a reserve-accumulation process starting in 2026, as markets and the IMF had been calling for.
by Ignacio Olivera Doll, Bloomberg
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