El Salvador's Bitcoin Bonds Commitments Exceed $ 500 Million
Written on: Februarie 12, 2022
Title : El Salvador's Bitcoin Bonds Commitments Exceed $ 500 Million
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El Salvador's Bitcoin Bonds Commitments Exceed $ 500 Million
El Salvador's Bitcoin Bonds Commitments Exceed $ 500 Million
Investor Commitments to El Salvador's Bitcoin Backed Bonds have exceeded $ 500 million, according to the Head of Blockstream's strategy, Samson Mow. The news comes when El Salvador's finance minister Alejandro Zelaya revealed on February 8 that the first bond will be issued between March 15 and March 20.
The Central American country plans to sell $ 1 billion in 10-year US dollar-denominated bonds with a 6.5% coupon. The securities will be issued on Blockstream's Liquid Network, a sidechain protocol built on top of the Bitcoin blockchain. Samson Mow, the chief architect of the bitcoin bond, told BeInCrypto on Friday that the bond had received more than $ 500 million in verbal commitments by the time it stopped counting a few weeks ago.
While Mow couldn't discuss further details, the figure shows a more than 66% increase in pledges from the $ 300 million reported in early December. It also indicates that the bond is now more than 50% filled four weeks before launch. The final term sheet - a non-binding agreement outlining the basic terms and conditions of an investment - may not be ready yet. On February 8, El Salvador's finance minister Zelaya said in an interview that he expects the country's first bitcoin bond to be issued by March 20.
"If we really want to build this country, we have to invest in this way," Zelaya said, adding that bitcoin bonds "will comply with all financial market regulations." The finance minister estimates the bond will be oversubscribed up to $ 500 million.
Mow says "keep an eye on target" as bond attacks ramp up
El Salvador plans to use half of its first $ 1 billion bond hike to build energy and bitcoin mining infrastructure, and the other half to buy even more bitcoins. In total, the country intends to issue up to 10 bitcoin bonds in the future, with the proceeds going towards building a new city that runs entirely on bitcoin, and to pay its debt to the International Monetary Fund (IMF).
The bond will be sold in $ 100 tranches, a structure that "democratizes access," allowing both institutional and retail investors to participate. But not everyone is thrilled with the idea. The IMF has repeatedly warned El Salvador, the first country to make bitcoin fiat money, against issuing bitcoin bonds.
Earlier this week, ratings agency Fitch downgraded El Salvador's long-term foreign exchange (IDR) issuer default rating from 'B-' to 'CCC', citing bitcoin adoption. as official currency last year as a key factor influencing the change.
Samson Mow dismissed what he called "attacks from the legacy system," warning in a tweet Thursday that these "will only escalate in the weeks before the launch of the Volcano Bond. Keep your eyes on the lens ”.
Gabor Gurbacs, a director of asset manager VanEck said, “The rating agencies actually do a lot of damage to current bondholders and states through inexplicable downgrades. If nothing else, El Salvador's economic prospects have improved, not worsened. Furthermore, the Bitcoin bond provides an additional mechanism to repay the current dollar bond debt ”.
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