El Salvador has started its third dollar bond buyback this year. This is thanks to Bitcoin reaching an all-time high after the US election results.
The government has announced plans to buy back bonds maturing from 2027 to 2034, with outstanding principal exceeding $2.5 billion.
El Salvador Buys Back Bonds with Bitcoin Profits
According to a Bloomberg report, the buyback depends on new fundraising. However, the specific fundraising terms have not yet been disclosed. El Salvador's Bit profits have significantly improved the bond performance. The country's bonds rose 4.7% last week after Donald Trump's US election victory.
Overall, this has made El Salvador's debt one of the best-performing in emerging markets, second only to Ukraine. Trump's second term is seen as favorable to President Nayib Bukele, potentially increasing the likelihood of securing fiscal support from the International Monetary Fund (IMF).
"For years, critics have criticized Nayib Bukele's Bit 'gamble', but they never understood his strategy at all. El Salvador has never invested more in Bit than it could afford to lose. This is not gambling, but applied game theory, and the pioneer will soon reap his rewards," influencer Lina Seiche recently wrote in an X (formerly Twitter) post.
Bukele gained global attention when El Salvador became the first country to adopt Bit as legal tender in 2021. After reaching new highs, the country's Bit holdings are currently valued at $515 million.
El Salvador's 'All-in' Bit Strategy Likely to Continue
Despite the positive market response, the IMF has persistently urged El Salvador to reduce its reliance on Bit. The IMF has opposed the use of cryptocurrencies as legal tender, citing risks to economic stability.
However, Bukele remains committed to integrating Bit into the economy. Earlier this year, Turkish company Yilport Holdings invested $1.6 billion in El Salvador's Bit City development project.
Bukele first announced this project in 2021. The Bit City development relies on government-issued Bit bonds. This ambitious project aims to create a hub for cryptocurrency innovation and investment.
Amid these developments, El Salvador raised $1 billion in debt in April and bought back $487 million in bonds. This includes securities that only pay interest linked to credit ratings or agreements with the IMF. The recent buyback efforts are being handled by Bank of America, according to the government's statement.
