El Salvador Launches 2 Debt Repurchase Offers Amid Uncertainty Over Its Bitcoin Bond
The government of El Salvador issued an offer on Monday to buy back a portion of its sovereign debt bonds maturing in 2023 and 2025, the Central American country said in a statement on Monday.
El Salvador established a purchase price of $91 for the bonds maturing in 2023, which were trading at $88.29 at the time of publication, and a $54 price for those bonds maturing in 2025, trading at $49.04 today. Each bond is worth a total of $800 million.
Today we have officially launched the purchase offer for all our external debt due from 2023 to 2025 🇸🇻— Nayib Bukele (@nayibbukele) September 12, 2022
All holders of bonds of the Republic of El Salvador can access this public and voluntary repurchase.
More information here: https://t.co/c6IidSSyRD
In July, when El Salvador’s President Nayib Bukele presented the repurchase plan, it was seen as an attempt to counter speculation about a potential default by El Salvador, amid strained relations between the Central American country and the traditional credit market, particularly after El Salvador established bitcoin as legal tender in September 2021.
Up to now, El Salvador is down roughly 50% on its sizable investments in bitcoin, representing a potential loss of $52.4 million, according to CoinDesk data based on Bukele's announcements.
El Salvador’s $1 billion bitcoin bond (also known as the Volcano Bond) still does not have a launch date, despite being announced in November 2021 by Bukele. Bitfinex and Tether Chief Technology Officer Paolo Ardoino, who has worked closely with El Salvador on the bitcoin bond project, said last month that government officials have told him to expect passage in September.
The bond repurchase offer will be available between Sept. 12 and Sept. 20, El Salvador said, adding that the “settlement of validly tendered and accepted notes is scheduled to occur on or about September 22.” Deutsche Bank Securities will serve as the dealer manager.
El Salvador added that the offer is “subject to an aggregate amount not to exceed $360 million to purchase the principal amount of notes accepted for tender and pay accrued interest and any premium with respect to such notes.”