El Salvador buys debts after Bitcoin loss

El Salvador buys debts after Bitcoin loss

The President of El Salvador, Nayib Bukele, wants to buy the dip again - but instead of Bitcoin, he has an eye on the bonds of his own country.

The controversial leader tweeted on Tuesday that he sent two draft laws to El Salvador's congress, in which he asked for approval to take out loans and to buy government bonds at market prices, which was also the case dropped up to 75 % last year.

bukeles step aims to reduce the government's debt positions Failure to pay is .

el Salvador recognizes Bitcoin as a legal means of payment, and Bukele made waves last year when he tweeted state assets about his outdated Bitcoin purchases using El Salvador.

Bukele bought a total of 2,381 BTC for $ 107.15 million and, according to information, has decreased by over 50 % of his investments www.nayibtracker.com .

Moody’s further downgraded the country's debt rating in May and referred to "Bitcoin-related initiatives". Bukele and his cabinet insist that the proposed debt returns are not due to financial mismanagement.

"El Salvador has the liquidity in order not only to pay all of his obligations in the event of due date, but also to buy all of his own debts (until 2025) in advance," wrote Bukele and added in a separate tweet that the debt returns would take place. Understanding the market price will probably move upwards as soon as we start buying all available bonds. ”

el Salvador's junk grade bonds rose to Bukeles twet, with bonds that are due in 2023, over 10 % and bonds in 2025 have risen by over 40 %, according to Bloomberg.

The invoices would finance El Salvador's debt referring through a loan of $ 200 million from the Central American Bank for Economic Integration and Reserve Mountains of the International Monetary Fund (IMF).

The IMF openly spoke out against the Bitcoin fixation of El Salvador and asked the country in January to remove Bitcoin's status as a legal means of payment, as there are concerns that the country's debt is "not sustainable".

el Salvador did not clarify the exact purpose of his buyback, although the proportion of the income of the country, which is issued for debt interest payments, has been steadily increased since 2016, according to the business data platform Trading Economics.

For what it is worth, IWF-researcher three "core goals" were outlined behind the buyback of government debt: reduction in debt payments, minimizing state risk and increasing liquidity on the domestic markets.

Nevertheless, earlier debt returns were largely unsuccessful to significantly reduce debt payments. In 1988 Bolivia bought trade debts worth $ 34 million, but only saw that his debt payments shrank around $ 400,000. according to Voxeu .

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