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El Salvador places debt repurchase offers as uncertainty around bitcoin grows

El Salvador is down almost 50% of its investments in the digital currency, representing a loss of $52.4 million

September 13, 2022 7:46am

Updated: September 13, 2022 9:57am

El Salvador’s government announced that it issued an offer on Monday to buy back part of its sovereign debt bonds maturing in 2023 and 2025 as the uncertainty around bitcoin continues to grow.

In a statement, the Central American country announced that it would purchase the bonds maturing in 2023 at $910 and those maturing in 2025 at $540. Each bond is worth a total of $800 million.

“All holders of bonds of the Republic of El Salvador can access this public and voluntary repurchase,” posted El Salvador President Nayib Bukele on Twitter.

“The goal is to market buy all available debt from 2023 to 2025 (considering there is a sizable portion of it not available for purchase),” Bukele explained in a separate tweet.

The bond repurchase offer will be available between September 12 and September 20 with Deutsche Bank Securities as the dealer manager. The “settlement of validly tendered and accepted notes is scheduled to occur on or about Sept. 22,” the government added.

The Salvadoran government added that the offer is “subject to an aggregate amount not to exceed $360 million to purchase the principal amount of notes accepted for tender and pay accrued interest and any premium with respect to such notes.”

Bukele presented the debt repurchase plan to Congress in July, which many saw as an attempt to counter the speculation that El Salvador might default after the value of bitcoin significantly decreased over recent months.

"Today we are sending 2 bills to Congress to ensure that we have the available funds to make a transparent, public, and voluntary purchase offer to all the holders of Salvadoran sovereign debt bonds from 2023 to 2025 at whatever the market price is at the time of each transaction," Bukele tweeted said at the time.

The Congress, which is controlled by Bukele’s party, approved both bills with majority votes.

El Salvador was the first country to make bitcoin legal tender in September 2021. Since then, it is down almost 50% of its investments in the digital currency, representing a loss of $52.4 million, according to CoinDesk data.