Disclaimer: Information found on CryptoreNews is those of writers quoted. It does not represent the opinions of CryptoreNews on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoreNews covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.
El Salvador, which adopted Bitcoin (BTC) as legal tender in 2021, has seen its dollar-denominated bonds outperform the majority of emerging market assets, delivering a 70% return in 2023. This significant rally has attracted interest from several institutional giants, including JP Morgan, Eaton Vance, and PGIM Fixed Income, prompting President Nayib Bukele to remark, “I told you so.”
In addition to these major institutions, firms such as Lord Abbett & Co LLC, Neuberger Berman Group LLC, and UBS Group AG have also added the country’s debt securities to their portfolios since April, as reported by Bloomberg.
Paolo Ardoino, chief technology officer of Bitfinex, told Cointelegraph that the strong performance of El Salvador’s bonds serves as a clear signal that investors are supportive of the government’s financial policies. He noted that this demonstrates renewed interest in investing in El Salvador’s economic narrative, adding:
“As the first company to receive a Digital Asset Licence, we are seeing significant interest in digital asset issuance and renewable energy investments, which the country has in abundance and is being used for Bitcoin mining and to provide more energy for the country’s electrical grid.”
The growing demand for El Salvador’s debt securities in 2023 stands in stark contrast to the market sentiment a couple of years prior, when the country first adopted Bitcoin as legal tender. The BTC adoption initially created uncertainty among investors, who bet against the country’s bonds, with several financial agencies casting doubt on the nation’s financial future.
In February 2022, the American credit rating agency Fitch lowered the country’s long-term Issuer Default Rating from B- to CCC. The agency cited policy uncertainty and the adoption of Bitcoin, along with an $800 million debt payment due in January 2023, as key factors.
Related: El Salvador’s Bitcoin strategy evolved with the bear market in 2022
Related Posts
El Salvador paid the $800 million debt in full within the due maturity period at the start of 2023, which helped restore confidence in the country’s bonds. At the time, President Nayib Bukele noted that they had proven every financial pundit wrong who doubted their ability to service their debts on time following the adoption of Bitcoin.
In the past year, almost every legacy international news outlet said that because of our “#Bitcoin bet”, El Salvador was going to default on its debt by January 2023 (since we had an 800 million dollar bond maturing today).
Literally, hundreds of articles https://t.co/rEiK7K13U4— Nayib Bukele (@nayibbukele) January 24, 2023
This rise in investor confidence is evident in the bond’s performance throughout 2023. During the same period, El Salvador also passed a landmark crypto bill, paving the way for a Bitcoin-backed Volcano bond.
El Salvador bond performance 2018-2023. Source: Bloomberg
El Salvador and its president have faced criticism since adopting Bitcoin in September 2021 as legal tender alongside the United States dollar. Financial pundits predicted that BTC adoption would further strain the country’s financial conditions. However, within two years, the state’s debt securities have become highly sought after by institutional giants, many of which had previously advised against investing in them.
Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.
Magazine: What it’s actually like to use Bitcoin in El Salvador
