El Salvador, the first nation to experiment with Bitcoin as national currency, has an $800 million bond due in January, according to Moody’s. Unfortunately, with the nation’s highly anticipated “Bitcoin Bond” yet to reach the market, it may have some trouble paying that debt.

There are conflicting sources surrounding how many investors are interested in the bond. Bloomberg suggests that it's garnered no support, while the nation’s finance minister claims it's 50% oversubscribed. Nevertheless, with the government yet to introduce legislation necessary for the bond to move forward, the clock is ticking.

El Salvador’s President Nayib Bukele announced the bond in November, a little more than two months after Bitcoin became legal tender across the country. It’s intended to raise $1 billion: $500 million in Bitcoin for the treasury, and $500 million to fund development for a "Bitcoin City" powered by geothermal Bitcoin mining. At present the country holds a little over 1,800 Bitcoin, worth about $70 million.


While the bond was supposed to go live in March, it has since been postponed until as late as September. The nation’s finance minister claimed at the time that Russia’s war with Ukraine had affected the price of Bitcoin, and thus made it an inopportune time to launch the product. Bukele gave an alternative reason, stating that the delay was due to prioritizing internal pension reform. 

Regardless of the reasons, the delay puts much-needed funds out of reach for the Salvadoran government. Prices for its debt collapsed by 15.1% in April, making for the greatest national drop after Ukraine. Its benchmark 2032 bonds now yield 24%—a level that suggests strong worries of default among buyers.

It doesn’t help that El Salvador’s relationship with the International Monetary Fund (IMF) is highly strained. The organization lends money to member states that are suffering from balance-of-payment issues. However, the country has abandoned talks with the IMF, which disapproved of both El Salvador’s and the Central African Republic’s adoption of Bitcoin. In light of the situation, the nation’s former central bank president has stated that El Salvador’s relationship with the IMF is “practically dead”.

Nevertheless, both the president and finance minister maintain that the country is at “zero risk” of default, according to Bloomberg. Their words contradict the opinions of institutions like Moody’s and Fitch, which have both cut El Salvador’s credit rating in recent months. Bukele, for his part, isn't listening; the president has been known to mock the opinions of both Moody’s and the IMF.

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