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Central American countries are trying to buy back $ 1.6 billion in government bonds as Bitcoin (BTC) prices fall and El Salvador is at increased risk of defaulting.
El Salvador’s President Nayib Bukele goes to parliament on July 26 to secure funds for the state to make a “transparent, public and voluntary purchase” offer to all holders of Salvador’s sovereign debt bonds. He tweeted that he had sent two bills.
Today, we have sent two bills to Parliament, transparent, public and voluntary for all holders of Salvador government bonds from 2023 to 2025, regardless of their current market prices. Secure funds to make purchase proposals. transaction.
Nayibbukele (@nayibbukele) July 26, 2022
Bukere added that bonds maturing between 2023 and 2025 will be repurchased at market prices in about six weeks or early September.
Some economists Claim The adoption of Bitcoin by El Salvador exacerbated the risk of default. However, Mr. Buquere said the country has sufficient funds to not only pay all debt when it expires, but to pre-purchase all debt by 2025.
According to the Financial Times reportFinance Minister Alejandro Celaya said at a news conference that the government would pay for the repurchase with a special drawing right from the International Monetary Fund (IMF) and a $ 200 million loan from the Central American Economic Integration Bank. The IMF itself has expressed concern about the adoption of Bitcoin by the country.
El Salvador bonds, which have been trading at low levels since the adoption of Bitcoin as fiat currency last year, have surged in value on repurchase news. Bonds maturing in 2023 rose about 10% in dollars to 86 cents, and bonds maturing in 2025 rose to the highest level since April and traded at 49.6 cents in dollars.
In a Twitter thread, Mr. Buquere emphasized the fact that the country is still ready to buy debt, although the price of El Salvador’s bonds will rise in the news of the buyback.
Last week, Morgan Stanley said he was ready to buy El Salvador’s bonds despite his poor performance.
El Salvador’s bond repurchase offer $ 1 Billion Bitcoin Collateral Bond Failed When the crypto market sank.
According to Carlos Asevedo, a former central bank governor of Salvador, the Wall Street Journal said the country could save $ 900 million in interest and principal if it could secure funds to buy government bonds. report.. Acevedo told FT:
“It’s the best option the government had on the menu to celebrate the expiration of these bonds. The success of this initiative depends on the reaction of the market.”
The achievement of El Salvador Downgrade By Fitch Ratings in February 2022. In May, Moody’s did the same.Estimates are that El Salvador’s unrealized loss on Bitcoin investment $ 57 million..
Bitcoin prices have fallen by more than 68% from their all-time highs in November last year. Ethereum (ETH) prices have also fallen by more than 69% from their all-time highs in November.
