Bitcoin enthusiast and president of El Salvador Nayib Bukele announced plans to buy back some of the country’s dollar-denominated bonds.
This strategic move aims to reduce El Salvador’s foreign debt, further reducing fears of a potential default for the small Central American country.
The bonds being repurchased include the 5.875% due 2025, the 6.375% due 2027 and the 8.625% due 2029.
Over the past year, these bonds have shown a notable recovery, particularly the 2029 bond, which rose from 50 cents to 90 cents on the dollar. The decline in the sovereign risk premium – now 6.2 percentage points above US Treasuries – further highlights improved investor confidence in El Salvador’s financial health.
The total outstanding debt arising from the bonds subject to the repurchase program is approximately $1.75 billion.
Barack earsmanaging director of Fixed Income at Alliance Global Partners in New York, told Bloomberg that this buyback represents a positive and forward-looking indicator of the stability of Bukele’s government.
Analysts generally expect El Salvador’s bonds to react favorably. However, despite the potential benefits, some money managers have expressed caution, pointing to last year’s triple-digit returns and deteriorating fiscal accounts.
The Nayib Bukele Portfolio Tracker reported that the country holds 2,825 Bitcoin, worth approximately $407 million at current market prices.
In a recent update on X, Bukele revealed “a big chunk” of the country Bitcoin Bitcoin/USD the wealth was moved to a cold wallet stored in a physical vault, which he calls El Salvador’s first “Bitcoin piggy bank.”
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