- Although several risk rating agencies raised a red alert on the credit risk of El Salvador as a result of adopting Bitcoin as legal tender, the nation has announced the payment of a million-dollar debt that it had.
- El Salvador had a debt of US$800 million in Eurobonds with a maturity date of January 2023.
- Nayib Bukele, president of El Salvador, asserted this week that he had paid in full, including interest.
El Salvador has become one of the countries to attract the world’s attention after the initiative of its president, Nayib Bukele, to establish Bitcoin (BTC) as legal tender in 2021.
After this event, global financial institutions made known their opinion against and their clear dissatisfaction. particularly the International Monetary Fund (IMF) at the time warned that the adoption of Bitcoin could bring “significant risks” to the country’s economy, so he urged the country to abandon cryptocurrency.
El Salvador is singled out for credit risk
There was great concern about El Salvador’s ability to meet debt repayment. Especially after Fitch Ratings, a credit rating agency, downgraded the long-term foreign currency issuer default rating from B to CCC in February 2022. El Salvador’s reputation in global markets for issuing more debt has soured.
At that time, the agency explained that part of the reasons why he would have decided to lower the rating of El Salvador was for the payment of $800 million US dollars in Eurobonds with a maturity date of January 2023; along with other elements such as high fiscal deficit, low access to financing in the local market, among others.
Nayib Bukele reports the payment of the debt that everyone considered lost
It is precisely this debt of US$800 million in Eurobonds that Nayib Bukele, president of El Salvador, asserted this week that he had paid in full, including interest through Twitter.
But, beyond that, Nayib Bukele sought to demonstrate that the predictions of the media and financial institutions regarding the future of the country were not fulfilled.
“They all said that without reaching an agreement with the International Monetary Fund, we would not be able to pay our 2023 bond due to our “losses in #Bitcoin“Bukele said.
Furthermore, he explained how many respected international media spread the narrative that “El Salvador was bankrupt and would enter into default”.
“Who would believe us and not all the international media and their ‘economic geniuses’?Bukele asked. But, despite everything, El Salvador seems to have been able to pay the debt that many believed incapable of achieving.
No specific details were provided on how the debt payment was completed. Nevertheless, according to Bloomberg, previously the country would have paid a part of the debt through the repurchase of sovereign bonds.
An interesting piece of information is that the next debt payment is due in 2025 and, according to D.W.the Statistical Registry of El Salvador has reported that, between 2023 and 2025, $1.2 billion US dollars in bonds will mature.
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