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Argentina to Offer Puts on Local Bonds to Entice Buyers

  • Put options would encourage banks to purchase local bonds
  • Banks also discussing shorter term on reserve requirements
The Central Bank of Argentina in Buenos Aires, Argentina, on Thursday, July 7, 2022. 

The Central Bank of Argentina in Buenos Aires, Argentina, on Thursday, July 7, 2022. 

Photographer: Pablo E. Piovano/Bloomberg
Updated on

Argentina’s central bank will start offering private lenders a put option on its local bonds that would compel the monetary authority to buy back the notes if prices fall too far.

The bank announced Tuesday evening that it will give financial entities a put option on Treasury notes sold starting in July and with maturities as far as December 31 2023. A put option is a financial instrument that allows the holder to sell the security at a set level, even if market prices fall below that level.