Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Argentina’s central bank has secured a $3bn loan from six major international banks, allowing the cash-strapped nation to make a big looming debt payment and boost its scarce dollar reserves.

The monetary authority said on Wednesday it had agreed a one-year repurchase agreement at a 7.4 per cent annual interest rate with “six top international banks”, without naming them. 

The deal comes ahead of a $4.2bn debt payment Argentina must make to bondholders on Friday. 

Rightwing President Javier Milei has been trying to demonstrate that Argentina can meet its debt obligations, which include repayments of almost $20bn this year, while also rebuilding the central bank’s foreign currency reserves.

Fernando Marull, director of FMyA financial consultancy in Buenos Aires, said half the repo facility would be used to top up funds the government has set aside to make Friday’s repayment, and that “the rest can help take care of reserves”.

Argentina’s slowness at building up central bank reserves, which it needs to service debts, pay for imports and prop up its currency, has become the biggest concern among investors about Milei’s economic programme, despite enthusiasm for his sweeping austerity and deregulation reforms. 

Almost all of the central bank’s $43bn of reserves consists of loans and other liabilities, and economists say accumulation has fallen more than $10bn short of a target set by the IMF in a $20bn programme it struck with Argentina in April 2025.

This week, the central bank began buying dollars in Argentina’s foreign exchange market, after last month announcing a plan to buy $10bn in 2026.

It also slightly relaxed a controlled exchange rate band, allowing it to widen in line with inflation of about 2.5 per cent a month, from the previous 1 per cent a month. The band has limited the central bank’s ability to buy dollars as it seeks to avoid weakening the peso.

“Securing the repo and the movement on reserves are two pieces of the puzzle that contribute to the fairly positive mood around Argentina at the moment,” said Graham Stock, senior sovereign strategist at RBC Bluebay, which holds Argentine sovereign bonds.

“Things appear to be on track for a return to markets later this year,” he added.

Argentina is currently locked out of global capital markets by prohibitively high borrowing costs, with investors demanding interest rates about 5.5 percentage points higher than the rates on comparable US Treasuries to hold its debts.

This premium has halved since Milei’s victory in midterm elections held last October, but analysts say it must fall closer to 4 or 5 points above Treasuries for Argentina to return to international markets and refinance its maturing debts, which Milei has said will happen in 2026.

The central bank said it had received offers of $4.4bn for the repurchase agreement, adding that “the strong interest” demonstrated the “process of normalisation” of Argentina’s market access.

The 7.4 per cent interest rate is lower than rates agreed in two repo deals worth a combined $3bn struck in 2025 with international banks including Citi, JPMorgan, BBVA, Santander and ICBC, which both come due in 2027.

Ramiro Blazquez Giomi, a strategist at financial services group StoneX, said Wednesday’s rate “was still elevated” considering that the new deal has a shorter duration than the previous ones and that Argentina provided similar collateral to that used previously, using sovereign bonds maturing in 2035 and 2038.

The central bank “must gain credibility” on reserve accumulation and advance political priorities to further lower borrowing costs, he added.