As the government of Argentina sought to bolster its low foreign reserves ahead of dialogues with holdout creditors, its central bank sealed a deal with seven Wall Street banks for $5 billion of loans.

Reuters reported that Argentina is virtually shut out of global credit markets due to its legal dispute against creditors in the US courts over an unpaid debt. President Mauricio Macri is hopeful that Argentina will regain access to capital and global markets. Currently,  Argentina has secured alternative financing.

According to a statement via email from the central bank, the one-year loan was finalized on Friday and will be backed by sovereign bonds.  After years of currency policies and controls that depleted the nation's supply of dollars and discouraged investors, Argentina is now seeking to shore up its bank reserves, Bloomberg says.

Due to a long-running dispute with creditors, the South American country failed in tapping international bond markets. Last month, the nation's cash hoard dropped to a nine-year low. Settlement talks are on its way and officials will begin to discuss with the holders of defaulted bonds, who won a US court order requiring they be paid in full amount.

The regulator said that this commercial bank loan will "facilitate the central bank's capacity to confront external shocks." Such loan will be backed by Bonar 2022, Bonar 2025, and Bonar 2027. It is expected to avoid disruption in the local market. After the local market closed, the central bank said in a statement that from $25.241 billion, Argentina's foreign reserve soared to $30.071 billion. Argentina's president promised to resolve the fallout of a dispute with hedge fund debt holders, as reported by Upstream.

Banks like JPMorgan Chase & Co., Santander, and HSBC will contribute $1 billion each and $500 million each, from BBVA, Citibank, UBS, and Deutsche Bank. Reports say that a proposal is now ready to be submitted to the US court-appointed mediator Daniel Pollack to settle the Argentina's legal debt battle.