Argentina's Central Bank (BCRA) announced on January 7 that it had secured a $3bn repurchase agreement with six international banks ahead of a critical $4.2bn debt payment due January 9, opting for expensive short-term liquidity rather than immediate return to international capital markets.

The 372-day repo carries a 7.4% annual interest rate and required Argentina to post approximately $5bn in Bonar 2035 and 2038 bonds as collateral—reflecting a steep 40% discount that underscores investor caution despite President Javier Milei's market-friendly reforms. Participating banks include BBVA, JP Morgan, Deutsche Bank, Goldman Sachs, Bank of China, and Santander, La Nacion reported.

The Economy Ministry will combine $2.3bn from existing Treasury accounts with $2bn purchased from the Central Bank to meet the January payment. These funds originate from previous Treasury deposits ($1.7bn), Comahue dam privatisation proceeds ($500mn), and the repo facility ($2bn), leaving approximately $1bn to reinforce international reserves post-payment.

Argentine sovereign bonds showed a muted reaction to the announcement. Global bonds due 2035 traded flat around 74.5 cents on the dollar with yields at 9.8%, according to Bloomberg.

The repo structure highlights the administration's delicate balancing act, meeting near-term obligations without triggering market concerns about debt sustainability, whilst preserving scarce dollar reserves.

With Argentina’s sovereign risk falling to its lowest level since 2018, according to a JPMorgan index, it remains to be seen whether this approach proves sustainable. This could depend on the libertarian government's ability to generate sufficient export revenues and fiscal surpluses before the facility matures in early 2026.

Argentina's economy is expected to expand by 3.4% this year, the central bank's latest economist survey showed, following an estimated 4.4% growth in 2025.