El Salvador accepts offers for debt repurchase totaling $940 Million

Under President Nayib Bukele’s leadership, El Salvador has made good on financial liberty. On October 4, the El Salvadoran government offered to repurchase its sovereign bonds that are due between 2027 and 2052 at slightly above-market prices and close to par values.

Now, El Salvador has made good on that word. According to a tweet on X from Nayib Bukele, “We’ve just accepted offers for debt repurchase totaling U.S. $940,441,670.83.” 

As part of the official announcement at the start of October, the project is a broader program for El Salvador to manage its external public debt proactively and promote certain conservation and sustainability efforts in El Salvador. 

In the future, El Salvador could repurchase or redeem the Notes not tendered or purchased in the invitation or repurchase or redeem other of its public debt.

According to reports, the principal amount for each holder’s validly tendered Notes accepted for purchase is calculated by multiplying the tendered amount by the approximate proration factor provided by El Salvador and then rounding the result down to the nearest U.S.$1,000. 

El Salvador accepted tenders of Notes subject to proration, provided that such proration does not lead to (i) the relevant holder transferring Notes to the Republic in a principal amount below U.S.$5,000 for the 2027 and 2029 Notes, below U.S.$10,000 for the 2034 and 2035 Notes, or below U.S.$150,000 for the 2030 Notes, Interest Only Notes, 2041 Notes, 2050 Notes, and 2052 Notes, as applicable.

Also, (ii) the return of Notes in a principal amount less than the applicable minimum denomination to the relevant holder. If proration results in a return of less than the applicable minimum denomination to the holders, the Republic is set to either accept or reject the entire tendered amount.

Bitcoin’s role in El Salvador’s pursuit of financial liberty

According to projections, El Salvador’s national debt is expected to climb by 9.1 billion US dollars between 2024 and 2029 (+30.5 percent). After the tenth straight year of growth, the national debt is expected to reach 38.93 billion US dollars, marking a new peak in 2029.

As defined by the International Monetary Fund, the general government gross debt consists of all liabilities that require payment or payments of interest and/or principal by the debtor to the creditor at a date or dates in the future.

During 2024 El Salvador’s Independence Day, Nayib Bukele said that the nation would no longer rely on loans to maintain national operations. The above initiative follows the nation’s plan of self-sustenance and escaping the IMF’s financial hooks. 

El Salvador’s debt stands at $11 trillion. Market analysts believe this will help structure a new wave of investments in the LATAM country. 

In addition, the debt repurchase could positively impact Bitcoin’s price by reinforcing the country’s ability to support its Bitcoin investments and positioning itself as a stronger advocate for the crypto coin.

In May, the nation announced it owns 5,748.76 BTC worth over $361 million at current prices. In 2021, El Salvador became the first country to adopt BTC as legal tender, alongside the U.S. dollar, which it had adopted two decades earlier.

The Bitcoin move earned Nayib’s government harsh criticism for its embrace of the volatile digital asset, including from the International Monetary Fund (IMF).