[2022-03-23] El Salvador Postpones Planned Bitcoin Bond

[bbc.reporter]

It appears there has been a delay in the bitcoin bond and it would not be very shocking if there are more delays for this similar to the bitcoin ETF. The skeptical me thinks that the government of El Salvador might be evaluating what type of political pressure might come to them if they continue to issue those bonds. They say unfavorable market conditions, however, I reckon the type of investors that would be attracted to those bonds are not much affected to unfavorable conditions of the mainstream markets.


#NewProfilePic https://mobile.twitter.com/nayibbukele/status/1485031106982428677?s=12

El Salvador has postponed its planned $1 billion bitcoin bond offering due to unfavorable market conditions, Finance Minister Alejandro Zelaya said on Tuesday on Salvadoran TV show "Frente a Frente."

It had initially been scheduled to launch between March 15-20 but the Russia-Ukraine war and its impact on the price of bitcoin caused the government to change the date, according to Reuters.

"I think this is not the time. There are some moves on the planet," Zelaya said, adding that he prefers the issuance to take place between March and April. "In May and June sometimes you can, but the market variables get different. After September, it is difficult to raise, unless you are previously funded, as in the case of bitcoin bond," he added.

According to Zelaya, the bond will be issued not by the government but instead by the state-owned thermal energy company La Geo. It will have a sovereign guarantee provided by the Salvadoran state, he added.

Read in full https://www.coindesk.com/business/2022/03/22/el-salvador-postpones-planned-bitcoin-bond-report/

[cabron]

The war makes it complicated not just because of the BTC price.

I reckon the type of investors that would be attracted to those bonds are not much affected to unfavorable conditions of the mainstream markets.

I think it's actaully time to invest in BTC individually like holding BTC on thier own wallet, not through the bonds. Most probably, the investors think they too could be harassed or funds could be frozen too like the oligarchs' wealth of Russia. Who is going to protect the investors from the El Salvador government grabbing thier money and freezing it thru the pressure of the IMF?

IMF has already warned El Salvador for legalizing BTC so it's not going to be surprising if IMF can grab their wealth thru the extension of their hands. IMF had done some warnings on other countries too like Argentina which is aggressively adopting cryptocurrencies.

[Lucius]

It appears there has been a delay in the bitcoin bond and it would not be very shocking if there are more delays for this similar to the bitcoin ETF. The skeptical me thinks that the government of El Salvador might be evaluating what type of political pressure might come to them if they continue to issue those bonds. They say unfavorable market conditions, however, I reckon the type of investors that would be attracted to those bonds are not much affected to unfavorable conditions of the mainstream markets.

Maybe the problem is that El Salvador is one of the countries that refused to condemn Russia for its aggression against Ukraine. I have already commented in the main ES thread that there is some reason for such a political position, and we can only speculate about what it is about. Is it that they estimate that most investors will turn their backs on them, or are they counting on Russian capital, which is now blocked?

[stompix]

Bitcoin bonds are oversubscribed by 50%! Laser eyes!
One day later:
Unfavorable market conditions bla bla bla! Laser eyes! Blame the Reptilians!

Bukele can't be trustest anymore, even if he claims 1+1=2!
He's gone full populist, he jumps from one thing to another changing his political views, trying to grab supporters from every group.
Actually, he's close to full retard:

@nayibbukele
18h
Invest in Volcano Bonds 🌋 and “make the world that bit harder to police”!
#Bitcoin fixes colonialism!

From a promoter of Bitcoin, he is slowly turning into a parasite!

[bbc.reporter]

@stompix. I speculate that the potential investors for the bitcoin bonds might be discouraged that the issuer was not going to be the government of El Salvador anymore. It appears Bukele's team behind the bond changed the roadmap and made state owned company La Geo as the issuer. This will not be a similar bond. A government issued bond is a more secure and safer investment, I reckon.

[PrimeNumber7]

I would advise El Salvador against issuing a "bitcoin bond", especially if they are bullish on the price of bitcoin over the term of the bond.

When you borrow bitcoin and use the proceeds for things that are priced/valued in fiat, you are effectively shorting bitcoin. If El Salvador believes the bitcoin price will increase, they will end up paying more money to pay off the bond than they received in proceeds.

Over the years, there have been a decent number of forum members who borrowed bitcoin at low prices, used the money to pay for something IRL, and ended up the equivalent of millions of dollars in debt.

[SFR10]

or are they counting on Russian capital, which is now blocked?

That's interesting, but why would they just postpone it?
^{- I don't think there's a chance that those sanctions would be lifted anytime soon.}

It appears Bukele's team behind the bond changed the roadmap and made state owned company La Geo as the issuer. This will not be a similar bond. A government issued bond is a more secure and safer investment, I reckon.

You have a point, but the government still owns it partially ^[CMIIW], so in a way, they'd still fall under them and as long as their credit ratings are somewhat good, the differences between those two shouldn't be that significant.

[bbc.reporter]

I would advise El Salvador against issuing a "bitcoin bond", especially if they are bullish on the price of bitcoin over the term of the bond.

When you borrow bitcoin and use the proceeds for things that are priced/valued in fiat, you are effectively shorting bitcoin. If El Salvador believes the bitcoin price will increase, they will end up paying more money to pay off the bond than they received in proceeds.

Over the years, there have been a decent number of forum members who borrowed bitcoin at low prices, used the money to pay for something IRL, and ended up the equivalent of millions of dollars in debt.

The government of El Salvador is not borrowing bitcoin. It is borrowing American dollars which 50% will be used to buy bitcoins and the other half will be used to build infrastructure for bitcoin city and the restoration of a geothermal plant.

I speculate the buyers of much of the bitcoin bonds will be Tether hehehe.

@SFR10. I disagree. Government bonds have always been better than corporate bonds because it offers more assurances and tax deductions than corporate bonds. Also, did the IMF's statements against the Salvador's issuance of the bitcoin bond caused this? I speculate it might be.

[Lucius]

or are they counting on Russian capital, which is now blocked?

That's interesting, but why would they just postpone it?
^{- I don't think there's a chance that those sanctions would be lifted anytime soon.}

Politics is a dirty and dishonorable business, and it is all a matter of negotiation and agreement, or rather satisfying the interests of all parties involved. As far as I know, the condition that Russia received for the sanctions to be lifted is that it withdraws from Ukraine and undertakes not to attack militarily again. This is a difficult scenario, but sanctions are just letters on paper, and if the war ended, everything would return to normal very soon.

However, we know that El Salvador supports Russia for some reason - and I have already written that anyone who has at least a little common sense and empathy for what is currently happening will not do business with such a country.