U.S. banks, including JPMorgan Chase (JPM), Bank of America (BAC), and Citigroup (C), have shelved a $20B bailout of Argentina, choosing to focus on a smaller, shorter-term loan package instead to support the fiscally stressed government, according to a media report on Thursday.
Last month, Treasury Secretary Scott Bessent and the Trump administration, seeking to support Argentine President Javier Milei’s pro-reform party, announced a $20B currency swap with the U.S. Treasury and plans for a $20B debt facility from U.S. banks.
Banks are now saying the $20B loan package is no longer under serious consideration, the Wall Street Journal reported, citing people familiar with the matter. The private-sector loan didn’t get very far as banks waited for guidance from the Treasury Department on what collateral and guarantees they could get to protect them from losses, the WSJ had previously reported.
Under the reworked plan, banks would lend Argentina ~$5B through a short-term repurchase facility, where Argentina would exchange a portfolio of investments for dollars from banks, the people told the newspaper. Argentina would then use the dollars to make a coming debt payment of ~$4B in January.
The Argentine government would then work with the banks to borrow billions of dollars from the bond market, and use the proceeds to repay the repo facility, probably within months, the people said.
The discussions are in early stages and cold still fall apart or change significantly, the WSJ said.
The Argentinian peso (ARS:USD) weakened 1.2% against the U.S. dollar. The Global X MSCI Argentina ETF (ARGT) dropped 1.2% in after-hours trading.