Argentina pays $4.3 Billion to Bondholders and meets critical deadline

A source in the Economy Ministry said that Argentina had paid $4.3 billion on Friday to holders of its sovereign debt. This was done as part of a move aimed at restoring confidence among investors and gaining access to international capital markets.

The central bank made the payment which included both principal and interest despite concerns about the depletion of the country's foreign reserves.

Investors had expected Argentina to fulfill its obligations, but bonds were traded this week calmly as a sign of market confidence.

The administration of President Javier Milei is eager to send a clear message to the markets as repayments to multilateral lenders and bondholders have risen sharply in this year. The next large payment of about $850 million is due to the International Monetary Fund in February.

This week, the authorities?secured an one-year loan to help pay off the debt.

Repurchase Agreement

The central bank said it used dollar-denominated local bonds due in 2035 and 2038 (Bonares) as collateral. The central?bank stated that it used dollar-denominated bonds due in the years 2035 and 2038 as collateral. Analysts claim that proceeds from the December Privatization of four Hydroelectric Power Plants also contributed.

Argentina, which has a history of defaults and last missed a payment in 2020, is facing

Pressure

Markets and the IMF must?rebuild reserve as a precondition for regaining access to markets. The country risk is still high but has fallen sharply, to 560 basis points. Investors are watching to see if January's commitments further reduce risk premiums and potentially open the door for Argentina to return to international markets.

The focus now shifts to the investors' reaction once the funds have been credited, said economist Gustavo Ber. He added that there could be a "reinvestment" effect.

The central bank began a program in December to improve the predictability of reserve building by buying dollars only when demand for pesos was high. It made its first dollar purchases in nine months this week, securing more than $100 million on the foreign exchange markets. Walter Bianchi, Leila Elliott and Lucinda Miller; Rodrigo Campos & David Gregorio.

(source: Reuters)