EL Salvador bonds fall down because investors keep an eye on Bitcoin use, IMF conversations

s & p Global said that risks related to the introduction of bitcoin as a parallel legal payment for the US dollar "seem to have its potential advantages" and there are "immediate negative effects on the Creditworthiness ”.

s & p also said that the use of Bitcoin threatens a potential agreement between El Salvador and the IMF.

The spreads of government bonds to comparable US state bonds rose to 986 basis points on Thursday and thus exceeded the previous record high in May 2020.

The bond courses are near the lowest in the last October before climbing on record highs in mid -April.

"These new course depths could promote the surrender of core long positions that are forced to re-evaluate their overweight positions without an IMF anchor," said Siobhan Morden, head of the Latin America bond strategy at Amherst Pierpont Securities, in a customer note.

"The economic agenda remains subordinate to the political agenda, without a clear framework for budget financing, no obvious commitment to the budget discipline and a political agenda that brakes investments and growth."

thousands of Salvadorians demonstrated on Wednesday against a supposed seizure of power of the otherwise popular President Nayib Bukele. The Bitcoin policy was also the goal of the protest, and an ATM on which the cryptocurrency can be exchanged for dollars was destroyed.

The rapid dismissal of judges of the Constitutional Committee of the Supreme Court in May and the latest court ruling that the President can serve two consecutive terms, which Bukele opened the door to re -election in 2024, have burdened his relationship with the United States.

US votes have the greatest weight in every decision on loans at the IM/P>

The potential for an IMF program for El Salvador is "in discussion," said fund spokesman Gerry Rice on Thursday in a press conference and added that measures to combat corruption and fiscal responsibility are at the top of the agenda.

The fund did not react immediately to a request to comment on the statement of S&P on the risks of a possible transaction.

You can find an overview of all the business events of today in our economic calendar.

(Reporting of Rodrigo Campos; additional reporting by Nelson Rentería and Marc Jones; editor of Paul Simao)