According to Moody’s, El Salvador’s bitcoin purchasing frenzy may increase the country’s credit risk if it continues.
The country’s government, led by President Nayib Bukele, has experienced liquidity concerns in the past, making bitcoin trading “quite risky,” according to Moody’s analyst Jaime Reusche in an interview with Bloomberg.
El Salvador has around 1,391 bitcoins in its possession, and “if it gets much higher, then that represents an even greater risk to repayment capacity and the fiscal profile of the issuer,” Reusche said.
Last year, the government made bitcoin legal money, and in November, it announced the sale of a $1 billion, 10-year bitcoin bond through Blockstream.
According to Bloomberg, the crypto bonds may help the country repay its debt, but “unless Bitcoin bonds are very well received and oversubscribed, we are seeing that the probability of the need to restructure their traditional market bonds is increasing.”
President Nayib Bukele, responds to the Moody news by replying on Twitter:
President Bukele is now renowned for trading cryptocurrencies on his phone, and the current sell-off may have lost El Salvador almost $10 million on its bitcoin holdings, according to prior estimates by Bloomberg. Nonetheless, the true profitability of El Salvador’s crypto portfolio is unclear because it is not publicly accessible.
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Patrick
Coincu News
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