El Salvador has initiated its third USD bond buyback this year, supported by Bitcoin’s all-time high following the US election results.
The government has announced plans to buy back bonds maturing between 2027 and 2034, with more than US$2.5 billion in principal remaining.
El Salvador’s Bitcoin bet continues to support its economy
According to i Bloomberg reportsthe buyback depends on securing new financing. However, specific terms of the financing have not yet been disclosed. El Salvador’s gains in Bitcoin have significantly improved the performance of its bonds. The country’s bond yield has been 4.7% since Donald Trump won the US elections last week.
Overall, this makes the country’s debt one of the best performers in emerging markets, surpassed only by Ukraine. A second Trump term is widely perceived as beneficial for President Nayib Bukele. It may increase the likelihood of obtaining financial support from the International Monetary Fund (IMF).
“For years, critics have criticized Nayib Bukele’s bet on Bitcoin without understanding his strategy. El Salvador has never invested more in Bitcoin than it could afford to lose. This isn’t a gamble, it’s game theory applied—and the first mover stands to reap the rewards,” wrote influencer Lina Seiche in a recent post on X (formerly Twitter).
Bukele attracted global attention in 2021 when El Salvador became the first country to adopt Bitcoin as legal tender. The nation’s Bitcoin holdings are now valued at USD 515 million following the latest all-time high.
El Salvador’s Bitcoin wallet over the years. Source: Nayib Tracker
The IMF continues its criticism
Despite the positive market response, the IMF continues to urge El Salvador to reduce its dependence on Bitcoin. The IMF has consistently opposed it to the use of cryptocurrency as fiat currency, citing risks to the nation’s economic stability.
However, Bukele remains committed to integrating Bitcoin into the economy. Earlier this year, the Turkish company Yilport Holding invested 1.6 billion USD in El Salvador’s Bitcoin City development project.
Bukele originally announced the plan for this project in 2021. The development of the Bitcoin City continues to depend on government-issued Bitcoin bonds. This ambitious project aims to establish a hub for innovation and investment in cryptocurrencies.
Meanwhile, El Salvador repurchased USD 487 million in bonds in April after raising USD 1 billion in debt. This included an interest-only security tied to its credit rating or a deal with the IMF. The latest buyback effort is being handled by Bank of America, according to the government statement.
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