He confirmed that on Tuesday he would send to the legislature two bills to “guarantee” the money with which he can buy bonds until 2025.
Without explaining where he got the money from, President Najib Boukil confirmed on Tuesday, via his Twitter account, that he would buy his own debt “in advance”, including debts that expire until 2025.
For this purpose, he stated that he will send two bills to the Legislative Assembly today to ensure that they have the funds available to “make a transparent, public and voluntary offer to all holders of debt securities from 2023 to 2025 at a market price.”
His announcement comes at a time when El Salvador’s bonds or debt securities are considered “garbage” in the international market, as each has fallen in value by half as investor confidence declines, and that the state can afford it.
Salvadorian bonds continue to lose value in the financial market
The Salvadoran bond 2025, for example, was worth $65 for every $100 invested a year ago, but now it’s half, that’s $30.
The 2023 bond, which is the closest to paying and has $800 million in debt, was valued at $98 in August 2021, and is now at $65. To date, it has started rising to $73.
In this regard, the economist Tatiana Marokin explained this financial process: “The Salvadoran state wants to buy its own debt, that is, not to pay who it owes, but to buy the bond (which is currently worth very little). With this it can save money, But he will be in breach of his obligation to pay as determined.”
According to Marroquín, despite the fact that the process is legal, this only indicates a liquidity crisis, contrary to what Bukele asserts. The professional added, “This, contrary to what they say, is not a sign of liquidity being able to repay, but, on the contrary, an inability to meet the debts as specified.”
The risk of default in El Salvador increased by about 10% in just one month
“It is another sign of financial chaos and is not the way for the country to stabilize its finances in the medium term and could be a tool for social and economic development,” he added.
Last year, at least three risk rating agencies (Moody’s, Fitch Ratings and Standard & Poor’s) downgraded the country’s credit rating due to its high debt and the concentration of Bukele’s power.
El Salvador is, today, the country with the highest credit risk in Latin America, surpassed only by Venezuela.