BUENOS AIRES, June 16 (Reuters) – The World Bank Group on Tuesday approved a guarantee-backed financing package to help mobilize up to $2 billion in commercial loans for Argentina, which will help the country reduce its financing costs and strengthen public debt management, the institution said in a statement.
Argentine newspaper Ambito had reported earlier on Tuesday, citing sources, that the World Bank was readying the guarantee-backed financing package.
The outlet also reported the Inter-American Development Bank was considering a guarantee for Argentina of up to $550 million, and that the Development Bank of Latin America and the Caribbean (CAF) was looking at another $500 million in support.
DEAL DETAILS
• The World Bank’s guarantee-backed financing package combines a policy-based guarantee from the International Bank for Reconstruction and Development with a guarantee from the Multilateral Investment Guarantee Agency, the bank said in a statement.
• The supported commercial loan has a six-year term, with a three-year grace period.
• The guarantee-backed financing package is due to support reforms to mobilize private capital for infrastructure, strengthen market competition and improve the business climate for companies.
• The guarantees will cover 95% of debt service payments on the supported commercial loan, allowing Argentina to reduce financing costs and strengthen public debt management.
• “We are committed to supporting Argentina’s macroeconomic stabilization and its growth-oriented reform agenda,” Susana Cordeiro Guerra, the World Bank’s vice president for Latin America and the Caribbean, said in a statement.
• The World Bank said in April that it was working to provide the South American country with a $2 billion plan to refinance its debt.
• The CAF on Tuesday also announced that it will provide a $400 million loan to Argentina’s Pan American Energy to finance the company’s natural gas operations and expand production.
• On June 11, the credit rating agency S&P raised Argentina’s long-term foreign-currency sovereign debt rating from CCC+ to B- and maintained its outlook as stable.
• “With the confirmation of the guarantee package approved by the World Bank, the economic team can consider this year’s financing program closed, securing a key liquidity bridge that clears upcoming financial commitments,” said Eric Ritondale, an economist at Argentine investment management firm Puente.
(Reporting by Jorge Otaola and Eliana Raszewski; Writing by Kylie Madry; Editing by Iñigo Alexander, Daina Beth Solomon and Stephen Coates)
