By Taos Turner
BUENOS AIRES -- Argentina on Thursday closed a deal to borrow $6 billion in 18-month loans from six international banks, Finance Minister Luis Caputo said.
The deal, which substantially reduces the country's need to sell bonds this year, comes just before Mr. Caputo and other officials will travel abroad to promote the issuance of up $7 billion next Thursday.
Under the deal, Argentina will borrow $1 billion each from Santander, BBVA Frances, Citibank, Deutsche Bank, HSBC and J.P. Morgan, paying an interest rate of Libor plus 290 basis points.
The deal helps assure the government can cover most of this year's financing needs in the first month of 2017. It also takes pressure off officials to issue more debt next week at higher rates than they might otherwise prefer.
"This is very, very positive news for us," Mr. Caputo told a news conference. "This lowers our need to tap the market by $6 billion."
Mr. Caputo said his team has been working to guarantee this year's financing needs -- about $20 billion in new debt -- while reducing exposure to potentially higher interest rates that some economists say could result from the election of Donald Trump in the U.S.
"Nobody knows what's going to happen," Mr. Caputo said. "But our job is to minimize risk. This clears a potential cloud and helps reduce uncertainty so people can say that this year won't be tough."
Argentina plans to sell up to $5 billion in dollar-denominated bonds and up to $2 billion in peso-denominated debt, Mr. Caputo said. He added that the government plans to keep investors hungry for additional debt and won't likely issue as many bonds as possible next week.
Mr. Caputo said Argentina's debt to GDP ratio is among the lowest in Latin America and easily sustainable compared with other countries that have issued debt at lower rates than Argentina.
"Most of the time we're not issuing debt to pay for spending but to replace maturing bonds," Mr. Caputo said. "Expectations are that demand will be very good."
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(END) Dow Jones Newswires
January 12, 2017 19:21 ET (00:21 GMT)
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