El Salvador Taps Bond Market as IMF Said to Visit Next Month – BNN Bloomberg

(Bloomberg) — Officials from the International Monetary Fund plan to visit El Salvador early next month as the two sides inch closer to agreeing on the terms for a potential loan program, according to people familiar with the matter. 

Two members of the IMF, including the El Salvador mission chief, took the unusual step of appearing in a call on Wednesday in which government officials were pitching investors on a new global debt sale, said the people. The presence of the IMF staff members signaled to investors that a deal is nearing, the people added, asking not to be named because the call was private.

The country tapped markets Thursday for a $1 billion, 30-year note that priced at par with a 9.65% yield, down from initial talks. The deal marks the Central American nation’s second issuance in global bond markets this year.

The future of an IMF program has been a key issue for investors. Negotiations have been ongoing since 2021, but stalled over the country’s adoption of Bitcoin as legal tender, which the IMF has repeatedly warned against. 

Last month, a spokesperson said the Fund had recommended that El Salvador narrow the scope of its Bitcoin law and increase oversight. 

Scant details

On the call, Luis Cubeddu, the assistant director in the Fund’s Western Hemisphere Department and Raphael Espinoza, the mission chief in the country, gave scant details on the status of negotiations other than to highlight the staff-level trip in early December, according to the people. 

Government officials said they expect a deal to be wrapped up by mid-December, without providing details on the size or length of the loan program, the people added.

An IMF spokesperson confirmed the lender is planning a staff mission to El Salvador in December as it seeks to reach an agreement on a potential program. A representative for the Salvadoran government didn’t reply to a message seeking comment on the call.

President Nayib Bukele made El Salvador the first country to adopt Bitcoin as legal tender in 2021. Since then, the country has accumulated about $530 million worth of the coins, the price of which rallied to a record in recent days, according to a government tally. 

The nation’s debt has outperformed most peers since Donald Trump won the US election last week as investors say his return to the White House will help Bukele win support for a loan from the IMF.  

New bonds

The country also has an open offer for bondholders of debt due between 2027 and 2034 to tender their notes. Bank of America is managing the deal, the people added. Authorities expect to use as much as one-third of the proceeds to fund the repurchase and the rest to pay government arrears, according to the people. 

The nation recently completed a debt-for-nature swap in which it bought back $1 billion of bonds at a discount to par. It had bought back $487 million of bonds in April after raising $1 billion in debt due in 2030 that included an additional interest-only security tied to the its credit score or reaching a deal with the IMF. 

–With assistance from Carolina Wilson.

(Updates with pricing details in third paragraph)

©2024 Bloomberg L.P.

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Publish date : 2024-11-14 09:18:00

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