El Salvador’s bonds are appealing to investors
The fact that El Salvador’s bonds have grown to be so well-liked and to draw in investors from all around is solely due to the efforts of the country’s president, Nayib Bukele, and his government. El Salvador’s foreign notes performed best in all the emerging markets.
All this while, it has been an uphill task for El Salvador in terms of coming into the good books of the International Monetary Fund (IMF). The global body has always remained apprehensive about El Salvador’s acceptance of Bitcoin, with no real assurances on its capability or intention of returning debts. Some policies enacted by the Bukele government have also been under the scanner and are not so agreeable where the IMF is concerned.
However, with the repayment of an $800 million bond maturing in the month of January 2023, the investors seem to be slightly pacified and are becoming more open regarding their views on El Salvador. Further, with the selection of the ex-IMF officer, Alejandro Werner, in the capacity of an advisor to the Bukele government, the overall situation is bound to improve even further, making the inclined investors feel more at ease.
According to Katrina Butt, a senior economist at AllianceBernstein LP, the investors seem to be moving towards El Salvador with increased confidence. She also feels that it may be possible for Werner to work on the public sector balance sheet and help make it stronger. As of today, the concerned officials of El Salvador have not granted permission for the IMF to come out with a staff report.
Presently, the bonds are showing an average of 28% for the year, as per a Bloomberg Index. However, according to the Managing Director of Fixed Income at Alliance Global Partners, Oren Barack, the overall scenario seems conducive enough for investors to make a beeline toward El Salvador.