At the heart of the year 2023, El Salvador, a Bitcoin-friendly nation, is witnessing an impressive rise in its bond yields, reaching a dizzying 70%. This development takes place after the country repaid a debt of 800 million dollars before it expires at the start of the year.
An exceptional bond performance in 2023
In 2021, El Salvador made an important decision by integrating Bitcoin as legal tender, an initiative that raised many questions in the international financial market. However, in 2023the country shows stunning results with a bond yield of 70%.
This surge has not gone unnoticed, capturing the attention of institutional giants such as JP Morgan, Eaton Vance and PGIM Fixed. A performance that gave President Nayib Bukele the opportunity to confidently reiterate: ” I told you so “.
In addition to these major players, other renowned financial institutions, including Lord Abbett & Co LLC, Neuberger Berman Group LLC and UBS Group AGhave also strengthened their debt investments since April, as the reports Bloomberg.
Paolo Ardoino, technical director of Bitfinex, highlighted the importance of these results. According to him, this bond performance testifies to growing investor confidence towards the financial policies of El Salvador.
He stated :
“As the first company to obtain a digital asset license, we are seeing strong interest in issuing digital assets and investing in renewable energy. The country, rich in these resources, uses them for both the bitcoin mining and to strengthen its power grid.”
From initial uncertainty to newfound confidence
The strong demand for El Salvador bonds in 2023 is quite different from the mistrust seen when the country adopted Bitcoin as its official currency. Many investors, skeptical, had then bet against the bonds of the country. Prestigious financial agencies had even expressed doubts as to the financial future of the country.
In February 2022, US rating agency Fitch downgraded the country’s long-term issuer default rating from B- to CCC. In question ? political uncertainty, the adoption of Bitcoin and a debt of $800 million due in January 2023.
However, El Salvador honored this debt in full and on time at the start of the year, restoring investor confidence. A decision hailed by President Nayib Bukele, who then pointed out that the country had denied all skeptical financial experts.
During this period, a major cryptocurrency law was passed, introducing a Bitcoin-based bond. Despite the criticisms received by El Salvador and its president since the adoption of Bitcoin in 2021, the country’s debt has become, in two years, an investment coveted by big financial players who once warned against it.
Sources: Cointelegraph, Bloomberg