The losses came even as bitcoin rallied and traded just above $30,000. Bukele has spent around $105 million buying the token since making it legal tender in September, according to his Twitter postings.
“Bitcoin is more substance than form, with no real contribution to external or investment flows,” said Siobhan Morden, head of Latin America fixed income strategy at Amherst Pierpont.
Morden points to a lack of medium-term financing plans for the sovereign, which has struggled to sell $1 billion in bitcoin-linked volcano bonds for more than five months.
The fact that longer-dated bonds are trading at an even higher level of risk suggests that investors are betting on the worst-case scenario, that of an upcoming default combined with low-recovery securities.
El Salvador must pay bondholders $329 million in interest this year, July being the month with the highest number of payments. The nation had $3.4 billion in reserves in April, according to the central bank. It was also confirmed that the Salvadoran government is in negotiations with the International Monetary Fund to obtain an expanded fund instrument.
This year, the nation’s sovereign debt is among the worst in the world according to a Bloomberg index, surpassing only the bonds of Ukraine and Belarus. The additional yield required by money managers to hold El Salvador’s notes on US Treasuries has widened to more than 26 percentage points.according to data from JPMorgan, well above the risk threshold.
Source: Ambito
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