El Salvador to Buy Back More Debt as Bukele Banks on Trump Lift

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(Bloomberg) -- El Salvador is offering to buy back dollar bonds for the third time this year as President Nayib Bukele gets a fresh lift from Bitcoin’s rally and the US election results.

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The government opened an offer to repurchase a series of notes due between 2027 and 2034. Those securites have a combined principal amount outstanding of more than $2.5 billion, according to a statement published Tuesday.

The statement does not say how the transaction will be paid for. But a person familiar with the situation said the debt buyback is contingent on new financing. The person, who asked for anonymity because the information isn’t public, said the details of the financing haven’t been released.

El Salvador’s debt has returned 4.7% since Donald Trump won the US presidency last week, outperforming all of its emerging-market peers except Ukraine, according to data compiled by Bloomberg.

Investors have long seen a second Trump term helping Bukele win support for a loan from the International Monetary Fund.

“El Salvador has been viewed by the market as a ‘Trump trade,’ with expectations that a stronger personal relationship between presidents Bukele and Trump will provide benefits to El Salvador,” said Katrina Butt, an economist at AllianceBernstein in New York. “It’s unlikely they have enough cash to do this type of buyback. They likely need to come to the market to finance the transaction.”

The IMF, which has been in talks with El Salvador for a potential deal since 2021, has repeatedly said the nation’s use of Bitcoin as legal tender is a sticking point.

Bukele made El Salvador the first nation to adopt the cryptocurrency as legal tender in 2021. After Bitcoin’s Trump-fueled rally, El Salvador’s holding have ballooned to $515 million, according to a government tally.

Debt Buybacks

El Salvador recently completed a debt-for-nature swap in which it bought back $1 billion of bonds at a discount to par and said it will use the savings to fund the conservation of nation’s longest river.

The government also 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.

The latest deal is being managed by Bank of America, according to the statement. The offer expires Nov. 18 at 5 p.m. in New York and the settlement is scheduled for Nov. 25.

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