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Argentina races against time: government seeks $3.3 billion to honor january debts amid red reserves
With negative net reserves and high country risk, Luis Caputo’s economic team explores REPO operations and new bond issuances to cover critical maturities without depleting cash.
The Argentine government is preparing to face a highly tense financial summer. President Javier Milei’s administration urgently needs to raise $3.3 billion to honor payments scheduled for January, in a scenario where the Central Bank’s net reserves remain at alarmingly negative levels. Under the leadership of Economy Minister Luis Caputo, the Casa Rosada is exploring a range of financial strategies to avoid using its scarce foreign currency and maintain exchange rate stability.
January’s “D-Day” and options on the table
The financial calendar imposes a trial by fire right at the beginning of the year: the Treasury faces a bond maturity of around $4.2 billion on January 9. To cover this obligation without further compromising the country’s financial health, raising $3.3 billion externally is imperative.
According to consulting firm FMyA, options on the radar include negotiating a REPO—a short-term loan secured by assets—or issuing new offshore bonds. Caputo has already signaled having offers from international banks totaling between $6 billion and $7 billion, and the market even speculates on the activation of a new currency swap.
The country risk obstacle and the cost of credit
Any move toward external financing runs into the barrier of country risk, which insists on remaining above 600 points. This indicator raises Argentina’s borrowing cost to about 10.99%, well above the Latin American average of 7.14%.
Recently, the government tested market appetite with the Bonar29N bond, raising $910 million—about 21% of what is needed for January. Although it was the first dollar issuance under local law since 2018, analysts warn that the success of new operations depends on a sustained drop in country risk.
Negative reserves: a $17.9 billion hole
Despite financial maneuvers, the accounting reality is harsh: net reserves hover around -$17.9 billion. Calculations by consulting firm LCG indicate that this figure is nearly six times below the target agreed upon with the International Monetary Fund (IMF).
Consulting firm 1816 reinforces that simply refinancing debts prevents a collapse in reserves but does not generate the genuine accumulation of dollars demanded by the Fund and investors, a task that becomes Herculean during the summer due to increased demand for dollars for tourism.
Recession and long-term scenario
Beyond short-term financial engineering, Argentina is navigating turbulent macroeconomic waters. The manufacturing industry remains in recession, and the country has seen the closure of nearly 20,000 companies in less than two years.
With inflation rising again in November (+2.5%), the medium-term horizon is also worrying: debt maturities with private creditors and international organizations total $13.8 billion in 2026 and jump to $18 billion in 2027, requiring structural solutions that go beyond monthly “firefighting.”
Resumo em Português:
O governo argentino busca captar US$ 3,3 bilhões para cobrir vencimentos de dívida em janeiro, enfrentando um cenário de reservas líquidas negativas (-US$ 17,9 bilhões) e alto risco país. O ministro Luis Caputo avalia opções como operações de REPO e emissão de novos títulos para evitar o esgotamento do caixa. O artigo destaca ainda a pressão do FMI por acumulação de divisas e o contexto de recessão industrial e inflação persistente.
Resumen en Español:
El gobierno argentino busca recaudar US$ 3.300 millones para cubrir vencimientos de deuda en enero, enfrentando un escenario de reservas netas negativas (-US$ 17.900 millones) y alto riesgo país. El ministro Luis Caputo evalúa opciones como operaciones de REPO y la emisión de nuevos bonos para evitar el agotamiento de la caja. El artículo también destaca la presión del FMI para la acumulación de divisas y el contexto de recesión industrial e inflación persistente.
