- El Salvador delays the launch of its Bitcoin bond possibly till September.
- The minister expressed hope that El Salvador would still launch the bond in the first half of the year.
- Zelaya reveals there is a high demand for the bond.
El Salvador’s long-anticipated Bitcoin bond has been delayed. The country’s finance minister on a local TV program revealed the information citing economic and geopolitical concerns.
‘Now Is Not The Time To Issue The Bond’
El Salvador’s minister of finance, Alejandro Zelaya, disclosed that the country would delay launching its Bitcoin-backed bond on a local TV show today. The bond was expected to be launched anytime from the 15th to the 20th of March. Notably, Zelaya had twice assured the public that the bond would be launched as scheduled, with the latest being on Friday, where he said the country was ready and waiting on the go-ahead from president Nayib Bukele.
However, after further consideration, the government of El Salvador has decided to hold off on the launch. Today, minister Zelaya said, “Now is not the time to issue the bond.” The minister disclosed that current market conditions were not convenient considering inflation concerns and the crisis in Europe.
The minister believes that the launch could be delayed until September. However, he expressed that his preference for getting funds for the bond was in the early half of the year, noting that the international market was not always favorable in the fall.
“In May or June, the market variants are a little different. At the latest in September. After September, if you go out to the international market, it is difficult (to raise capital)”
Bonds are safe investment vehicles that governments and major businesses use to obtain funds. Notably, the concept of the Bitcoin bond was disclosed by El Salvador President Nayib Bukele last November. Half of the funds generated by the bond is to be used to build “Bitcoin City” at the foot of Conchagua Volcano, which would also be the source of power for the city and its proposed Bitcoin mining operation, while the other half is to be used to acquire more Bitcoin.
The Bitcoin Experiment
El Salvador made Bitcoin a legal tender last September becoming the first country to do so. The decision has been criticized by many international bodies, including the IMF and BIS. Several of these financial authorities believe that there are no sufficient consumer protections and that it hurts their financial integrity. The IMF has consistently urged the government of El Salvador to remove Bitcoin’s Legal Tender status.
El Salvador’s finance minister has told the public that there is significant interest in the bond despite all of these. Furthermore, he revealed that the bond could be increased by $500 million due to the high demand. Notably, the Bitcoin bond would offer investors 6.5% interest annually for ten years.
While El Salvador has said it is ready to issue the bonds, the country is yet to pass the legal framework to support it or release its “key information document,” to offer investors full disclosure.