El Salvador’s cryptocurrency bond is not attracting investors. In fact, according to Bloomberg , there hasn’t been one buyer for the crypto-backed offering.
Nayib Buke, a millennial president, is seeking $1 Billion for the cryptobacked bond. However, he has been met with skepticism by credit agencies and International Monetary Fund.
Bukele’s request to legalize bitcoin has been criticized by the IMF before and the IMF has asked the government to reconsider its dependence on the cryptocurrency.
El Salvador’s 2032 conventional bonds are now yielding 24%. This is a high level that indicates markets see the debt as high-risk and are anticipating a default. Bloomberg data shows that El Salvador’s conventional bond yields have fallen more than any other country, except the war-torn Ukraine.
Bloomberg reported that the nation’s dollar debt was at an all-time low when Bukele presented his plan for bitcoin bonds. Fitch Ratings reduced El Salvador’s rating from CCC to CCC in February. This was due to the country’s increased dependence on short-term loans and limited financing sources. The finance minister of El Salvador recently stated that there is ‘zero risk’ of default.
Investors are now concerned about whether El Salvador can keep up its current bond payments and its willingness to continue servicing its debt.
Bukele stated that half of the $1billion raised for the Bitcoin Bond would go to buy more bitcoin and the rest would be used for energy or bitcoin mining infrastructure.