19th April 2024

El Salvador returned to the bond market after four years with a US$1bn issuance at 12% that will mature in 2030. This is the largest debt in the country’s history and only four nations have issued sovereign debt above 10% since 2019. The rate could increase to 16% if El Salvador fails to reach an agreement with the IMF by October 2025 or get two of three risk agencies to raise their country grade. The IMF has said addressing Bitcoin risks is key to any agreement with El Salvador as well as fiscal consolidation, liquidity buffers and improved transparency. Analysts point out the new issuance suggests an urgent need for liquidity. Part of the new debt will be used to buy back old bonds with President Nayib Bukele committing to purchasing US$486.7mn of the US$1.75bn bond debt that matures between 2025 and 2029.

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