Argentine Central Bank Is Considering $5 Billion Repo Loan

(Bloomberg) -- Argentina’s central bank is said to be discussing a repo loan of as much as $5 billion with foreign banks, according to people with knowledge of the matter.

The talks with banks including HSBC Holdings Plc, UBS Group AG and Nomura Holdings Inc. are expected to continue into next week as the central bank considers its options to secure financing, said the people, who could not be named because discussions are still private.

The central bank, which faces 528 billion pesos ($19 billion) in maturities of short-term notes known as Lebacs on Aug. 15, is said to be looking to use the proceeds from the repo to repurchase a portion of the notes. The lender was asked to offer Bonar bonds as collateral for the repo, which may include Bonar 2022, 2025 and 2027 bonds. The yield that’s being discussed is a floating rate of Libor plus a spread of 200 or 300 basis points for a 12- to 14-month loan, the people said.

The repo would follow a record $50 billion credit line from the International Monetary Fund as Argentina looks to shore up its finances after its currency suffered the worst rout in emerging markets this year. Foreign reserves have fallen 9 percent since the first tranche of money from the IMF credit line was disbursed on June 22.

A representative for the central bank didn’t immediately reply to a request for comment. A representative for Nomura declined to comment, while HSBC didn’t have an immediate comment and UBS couldn’t be immediately reached for comment.

The repo loan was pitched to the central bank by the financial firms involved, which may be as many as five, one of the people said.

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