Between March 15 and 20, El Salvador plans to finish the preparations for its first $1 billion in Bitcoin bonds. The oversubscription of securities will amount to “at least $500 million,” according to the country’s finance minister, Alejandro Zelaya. The $100 minimum purchase and the lack of a broker during the placement, according to the official, will increase the pool of possible investors.
El Salvador’s first $1 billion bitcoin bond will be issued
El Salvador’s first $1 billion bitcoin bond will be issued between March 15 and March 20, according to Finance Minister Alejandro Zelaya. Zelaya claimed the bond will be published on Liquid, a bitcoin-based service built by Blockstream, with a 6.5 percent coupon, on the Salvadoran TV show “Frente a Frente.”
According to Zelaya, the usage of Liquid will allow investors to participate in the trade with as little as $100. “All financial market regulations will apply to bonds,” he continued. “All [know-your-customer] criteria will be completed, as well as all due diligence.”
Blockstream’s chief strategy officer, Samson Mow, told CoinDesk in December that the bond had already received $300 million in soft pledges.
El Salvador President Nayib Bukele said in November that half of the $1 billion raised will be used to help build required energy and bitcoin mining infrastructure, while the balance would be utilized to increase the country’s bitcoin holdings.
On November 20, when El Salvador’s president Nayib Bukele shared the stage with Blockstream chief strategy officer Samson Mow, the world first learned about the bitcoin bond concept. Mow detailed the bond’s terms, and Bukele revealed intentions to establish Bitcoin City, a new crypto-friendly town.
While crypto fans are enthusiastic about the bonds and are likely to want to purchase them in order to make their stamp on history, other financial experts have questioned whether they are a suitable investment and will attract enough investors.
The International Monetary Fund (IMF), which is apparently in talks with El Salvador for a $1.3 billion loan, recently stated that some of its directors are “concerned about the dangers connected with issuing Bitcoin-backed bonds.” Meanwhile, according to Reuters, the country has an $800 million bond due in January 2023.
According to the November presentation, El Salvador’s first bitcoin bond will have a 6.5 percent coupon and will maturity in 2032. During the interview, Zelaya also referenced the voucher. The country intends to use half of the issuance for bitcoin purchases, with the remaining funds going toward energy infrastructure and mining.
When Bukele and Mow introduced the bonds, Bitfinex Securities was listed as the bookrunner. iFinex Inc., the company’s parent, announced on November 19 that it had reached an agreement with El Salvador’s government that “outlines a collaboration on the creation of digital assets and securities regulatory framework to regulate, issue, and operate digitized financial instruments in El Salvador.”