Source: Adobe/Maxim
The usual money managers are still incredulous about El Salvador's prospects of launching a new economic paradigm thanks to an upcoming bitcoin (BTC) bond issue. Yet other countries may be eyeing the Central American nation with keen interest, hoping to do the same if El Salvador's resolution to adopt BTC as legal tender last year bears fruit.
In a Financial Times report, Kevin Daly, a portfolio manager at investment firm Abrdán, said that "to our surprise," Salvadoran Finance Minister Alejandro Zelaya "said he had a request for up to €1.500 billion." for bitcoin bonds”, which will be used to build a new tax haven for international cryptocurrency advocates and pioneers.
In any case, Daly, like many others called in the report, asserted that the program was "a misstep" on the part of the government, asserted that El Salvador was "confused" in the broadcast and said:
"If we print €1 billion, we'll all shake our heads in surprise.
Investment firms Meketa Investment Group and NEPC also said demand is "sure to be subdued" in the field of institutional investment, "including pensions and endowments." The companies claimed that "retail investors and cryptocurrency enthusiasts" would get "the lion's share" on their site.
As noted, Fitch has already downgraded El Salvador's sovereign credit rating to CCC from B-. The company claims that the adoption of bitcoin as legal tender could put a potential financial lump of US$XNUMX billion from the IMF (IMF) at risk.
However, Salvadoran President Nayib Bukele doubled down on his “bet” on bitcoin and took a contradictory stance in the face of these “cautious” warnings from the IMF and other organizations such as the World Bank.
Still, the report's creator noted that bitcoin is not considered a "speculative asset" in "emerging market countries" where "the focus is on transactions."
The report quotes Lord Fusitu'a, a Tongan aristocrat and former MP, who "seeks to introduce a bill that could make Bitcoin legal tender in Tonga from February XNUMX," as saying: "Our biggest and most profitable export is our people. They bring us more money than any merchandise.
Meltem Demirors, chief strategy officer at crypto asset management company CoinShares, reportedly said:
"El Salvador is a case study for other developing countries that depend on the World Bank and the IMF for their financing."
Nations with edicts in decline and large overseas communities sending remittances to home-based families were identified as potential BTC adopters who could watch developments unfold in El Salvador without losing interest.
Earlier this month, the government hinted at a series of legal reforms to lay the groundwork for the bonds, including a possible bond issue on March XNUMX. These have not materialized, but Bukele and his ministers may be waiting for a better time to start.
A large part of the bond demand is expected to come from abroad. But with the Ukraine showdown making global headlines, Bukele surely believes that waiting might be a wiser course of action.
Either way, the president, who has overseen an easing of ties with Washington (and may well be looking to de-dollarize his economy), took the time to tweet a nudge aimed at US financial chiefs throughout the Weekend.
Investor and bitcoiner Anthony Pompliano wrote that the bond issue "seems to pave the way for a revolution in sovereign debt markets."