President of El Salvador Nayib Bukele
Rolan Barrientos/APHOTOGRAFIA/Getty Images
El Salvador paid an $800 million bond with interest, President Nayib Bukele tweeted on Monday.
A portion had earlier been bought back, putting the amount that matured on Tuesday at about $600 million.
The government got a big boost in its ability to pay after receiving a $450 million loan from the Central American Bank for Economic Integration.
President Nayib Bukele took to Twitter on Monday to announce that El Salvador repaid an $800 million bond issue with interest.
A portion had earlier been bought back, putting the amount that matured on Tuesday at about $600 million. The government got a big boost in its ability to pay after receiving a $450 million loan from a multilateral lender, the Central American Bank for Economic Integration.
Growing optimism that El Salvador could avoid defaulting on the debt helped drive a rally in its bonds. But concern remains on Wall Street about the country’s ability to avoid a debt restructuring further in the future, unless it can come up with new revenue or impose more spending restraint. El Salvador still has about $6.4 billion in outstanding foreign bonds.
Bukele said in separate tweet that critics predicted El Salvador wouldn’t be able to pay its 2023 bond due to its losses on crypto investments, and that it would need to strike a deal with the International Monetary Fund to fulfill its debt obligations.
Last year, ratings agency Moody’s warned that the country’s bitcoin-buying spree raised its credit risk, as the government has had liquidity issues in the past. The agency has said El Salvador has a “challenging redemption schedule” and deterioration in the quality of policymaking.
In 2021, El Salvador declared bitcoin as legal tender and has been buying up the tokens on a regular basis, while also planning to build a “Bitcoin City.”
Earlier this month, El Salvador passed legislation that allows for bitcoin-backed “volcano bonds” that will help support a bitcoin mining industry in the new city, powered by El Salvador’s active volcanoes.
Bukele said in 2021 that the goal is to raise $1 billion from the issuance of the bonds, which would be denominated in US dollars and pay 6.5% annually for 10 years.
As for bitcoin, which saw a 65% crash last year, has rallied about 35% in 2023.
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Source:: Business Insider