Argentina’s President Mauricio Macri has kicked off talks with several Wall Street banks for $5 billion to $10 billion of loans in a bid to shore up central bank reserves, according to two people with knowledge of the matter.
Macri’s incoming Finance Secretary Luis Caputo, who traveled to New York this week, spoke with banks about backing the loans with sovereign debt owned by the central bank, said the people, who asked not to be identified because the matter is private. The loans would be repaid by the monetary authority in a year, said one of the people. A spokeswoman for incoming Finance Minister Alfonso Prat-Gay didn’t immediately reply to an e-mailed request for comment.
Argentina’s new government is faced with the lowest international reserves in nine years as it begins to unwind former President Cristina Fernandez de Kirchner’s policies that fueled inflation, kept the peso artificially strong, slowed the economy, and prevented the nation from tapping global bond markets. The country, which has been locked in a decade-long legal battle with leftover creditors from its 2001 default,wants to begin settlement negotiations with the holdouts promptly, Caputo told a court-appointed mediator.
“Given the financial emergency, we expect the government to obtain about $10 billion in financing in the first quarter to build reserves,” Sebastian Rondeau, an economist at Bank of America Corp., wrote in a report Thursday.
Argentine newspaper La Nacion reported the talks earlier Thursday.
Macri was sworn in Thursday.