- There is speculation that the Central American country will default on its debt
- The president assured El Salvador’s liquidity sufficed to cover its current debts in a timely manner
On Tuesday, El Salvador President Nayib Bukele sent the local congress two bills to try and secure funds to repurchase sovereign debt bonds maturing next year and in 2025, CoinDesk wrote. His announcements came amid speculation that the Central American country would default on its debt.
Strained relations with conventional finance market
Relations between El Salvador and the traditional credit market remain strained. The International Monetary Fund repeatedly recommended the country stop using Bitcoin as legal tender because of the risks and liabilities associated with it.
El Salvador has lost over 50% on Bitcoin investments
The country has lost around 54% on its investments in the flagship crypto, equivalent to a potential loss of almost $60 million, according to the president’s announcements.
El Salvador bought the Bitcoin currently in reserves for $45,000 per BTC on average, having spent a total of $103.9 million on it so far.
Buying operation to begin in six weeks
The government of El Salvador plans to begin the buying operation in six weeks, after completing the corresponding paperwork, according to a tweet by Bukele. He added that the government would pay the bonds at market price at the time of the transactions.
The president assured El Salvador’s liquidity sufficed to cover its current debts in a timely manner and to purchase all of its debt until 2025 in advance. The bonds maturing next year and in 2025 are worth around $800 million each.
Bitcoin bond plans fell through?
Last November, the president announced plans to issue a Bitcoin bond worth $1 billion using Blockstream’s Bitcoin-based service Liquid. Those plans were put off due to unfavorable market conditions.
