U.S. Banks Shelve $20 Billion Bailout Plan for Argentina

 A planned $20 billion bailout to Argentina from JPMorgan Chase, Bank of America and Citigroup has been shelved as bankers pivot instead to a smaller, short-term loan package to support the financially distressed government, people familiar with the matter said.

Treasury Secretary Scott Bessent and the Trump administration had been seeking to bolster Argentine President Javier Milei’s pro-reform party when they announced a pair of financial lifelines this fall. The package included a $20 billion currency swap with the U.S. Treasury Department and plans for a separate $20 billion bank-led debt facility.

The bailouts were announced when Milei’s government seemed under pressure, but congressional elections in October were seen as a resounding victory for his party. That result sent the country’s bonds and currency rallying.

The private-sector loan didn’t get off the ground as banks awaited guidance from the Treasury Department on what collateral and guarantees they could use to shield them from losses, The Wall Street Journal previously reported. Now, bankers are saying it is no longer under serious consideration, according to people familiar with the conversations.

Instead, banks are focused on plans to lend Argentina around $5 billion through a short-term repurchase, or “repo” facility, where Argentina would exchange a portfolio of investments for dollars from the banks, the people said.

Argentina would be expected to use the dollars to make a coming debt payment of around $4 billion in January, the people said.

Milei’s government would then later work with the banks to borrow billions of dollars from the bond markets and use the proceeds to pay back the repo facility, likely within months, the people said. Banks could be caught on the other foot if market conditions change and Argentina can’t sell new bonds or find other funds to repay them.

Talks are still in early stages and could change or fall apart, the people added. Argentina’s Finance Minister Luis Caputo has pledged to update investors on plans to build foreign exchange reserves by early December, they said. Bloomberg Linea previously reported some details of the discussions.

Outside of the banks’ planned support for Argentina, the Treasury Department has already gone to great lengths to support Milei’s administration.

It isn’t clear how much of the Treasury’s $20 billion swap has been used by Buenos Aires, but data from Argentina’s central bank showed a $2.5 billion increase in short-term foreign currency swaps between the end of September and the end of October. Argentina’s central bank declined to comment.

The U.S. also sent approximately $900 million to Argentina through a transfer of “special drawing rights,” a type of reserve asset held by world governments at the International Monetary Fund, according to people familiar with the matter and IMF data.

“The United States remains confident in President Milei and Minister Caputo’s commitment to core principles as they work to Make Argentina Great Again,” a Treasury spokesman said. He declined to provide more specific details about U.S. financial support for Argentina.

In an X post on Oct. 29, Bessent said that the “Argentine economic bridge has now turned a profit for the American people.”

Former Treasury officials have publicly criticized the lack of transparency around the U.S. financial support for Argentina, saying it is a break from past practice when it supported countries like Mexico in the 1990s.

“There is essentially no information on how that money is being used,” said Brad Setser, a senior fellow at the Council on Foreign Relations and an assistant Treasury secretary during the Obama administration. “I think that is unusual given that this is a use of taxpayer money.”