El Salvador repaid an $800 million bond maturing in January

El Salvador repair an $800 million bond the day it was set to mature, the country’s Finance Minister Alejandro Zelaya announced on Monday after fears that the country would default on the payment. 

"We announce that we have today completed payment of the 2023 bond for $800 million, plus interest," Zelaya said on Twitter.

The presidency’s office told Reuters that the payment consisted of $604 million and $23.4 million in interest. "El Salvador is meeting its debt obligations," it said.

However, the government still owes $367 million plus interest for an $800 million bond maturing in 2025. 

El Salvador has faced significant pressure to demonstrate financial stability since President Nayib Bukele embarked on the adoption of bitcoin as legal tender in 2021, the first country to ever do so. The move has cost the country over $60 million in losses. 

Several rating companies, including Fitch and Moody’s, have downgraded El Salvador’s sovereign debt claiming that the country’s bitcoin holdings are adding to its risk portfolio and subjecting it to volatility. Other financial institutions, such as The International Monetary Fund (IMF), the World Bank, and JP Morgan, have said that the country is on an unsustainable path and might default on its payments. 

“In the past year, almost every legacy international news outlet said that because of our ‘bitcoin bet,’ El Salvador was going to default on its debt by January 2023 (since we had an 800 million dollar bond maturing today),” Bukele said on Twitter. “Literally hundreds of articles."

Last year, the country was able to pay back a $196 million debt by carrying out a partial buyback of the bond that matured this week. 

This month, El Salvador reached a deal with the Central American Bank for Economic Integration for a $350 million loan to help “to strengthen the administration of government revenues and expenses through measures to reduce the tax gap and increase tax collection, as well as reduce smuggling and tax evasion.”