El Salvador Bitcoin Bond Commitments Top $500 Million – According to Blockstream chief strategy officer Samson Mow, investor commitments to El Salvador’s bitcoin-backed bonds have already surpassed $500 million.
Meanwhile, El Salvador’s finance minister, Alejandro Zelaya, announced on February 8 that the first bond will be issued between March 15 and March 20.
The Central American government intends to sell $1 billion in 10-year bonds with a 6.5 percent coupon in US dollars. Blockstream’s Liquid Network, a sidechain protocol built on top of the Bitcoin blockchain, will be used to issue the securities.
The bitcoin bond’s principal architect, Samson Mow, told BeInCrypto on Friday that the bond had received more than $500 million in verbal promises when he stopped counting a few weeks ago.
While Mow was unable to provide any additional information, the sum represents an increase of over 66% in commitments from the $300 million disclosed in early December. It also means that the bond is already more than half-filled, four weeks before its scheduled launch.
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The final term sheet, which is a non-binding agreement outlining the fundamental terms and conditions of an investment, may not be available just yet. In an interview on February 8, El Salvador’s finance minister, Zelaya, stated that the country’s first bitcoin bond will be issued by March 20.
“If we truly want to develop this country, we must invest in it in this way,” Zelaya was quoted saying, noting that the bitcoin bonds “would conform with all financial market norms.” The bond is expected to be oversubscribed by up to $500 million, according to the finance minister.
Mow Says to ‘Keep Eyes on Goal’ as Attacks on Bond Mount
El Salvador intends to spend half of the $1 billion raised from its first bond offering on energy and bitcoin mining infrastructure, as well as the other half on future bitcoin purchases. The country plans to issue up to 10 bitcoin bonds in the future, with the proceeds going toward the construction of a new bitcoin-only city and the repayment of its IMF debt (IMF).
The bond will be offered in $100 tranches, allowing institutional and individual investors to participate. However, the concept does not appeal to everyone. El Salvador, the first government to make bitcoin legal tender, has been advised repeatedly not to issue bitcoin bonds by the International Monetary Fund (IMF).
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Fitch lowered El Salvador’s long-term foreign currency issuer default rating (IDR) from ‘B-‘ to ‘CCC’ last week, citing the country’s acceptance of bitcoin as an official currency last year as a major cause.
In a tweet last Thursday, Samson Mow rejected “attacks from the legacy system,” warning that they “would only accelerate in the weeks leading up to the Volcano Bond launch.” “Keep your sights on the prize.”
“The ratings agencies actually do a lot of damage to current bondholders and states via unexplained downgrades,” said Gabor Gurbacs, a director at asset manager VanEck. El Salvador’s economic prospects have improved, not deteriorated. In addition, the Bitcoin bond provides an extra option for repaying existing dollar bond debt.”