El Salvador Delays Bitcoin Bonds Issuance Citing Adverse Market Conditions

El Salvador's finance minister says the country is "ready" to issue its first so-called Bitcoin bond, but still waiting for the right moment to do so. The Central American country had previously estimated it could launch the $1-billion (roughly Rs. 7,620 crore) bonds between March 15 and March 20. Finance minister Alejandro Zelaya said today the government is ready to issue the bond but waiting for the right time. Zelaya did not mention a postponed date for when the bond would launch.

"We are ready to do it," Zelaya said during a local news interview. However, he said the El Salvador government is still waiting on President Nayib Bukele's go-ahead.

When the interviewer asked whether now is the right time, he responded: “I don't think it is yet, I think we have to wait a couple more days.” But he then clarified that this does not necessarily mean exactly two or three days from now. Zelaya explained that he prefers to see bond issues happen between March and April due to market conditions, and no later than September.

“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)," he mentions, as noted by Reuters.

Zelaya had first mentioned that timing could be an issue during a March 11 appearance on the same television programme, citing the war in Ukraine as an unforeseen factor affecting the international market.

Back in November 2021, Bukele announced plans to build a "Bitcoin City" funded by the sale of the bonds, which have an annual coupon of 6.5 percent. He then mentioned that half the funds will be used to accumulate Bitcoin, while the rest would be earmarked for infrastructure and Bitcoin mining powered by geothermal energy.

However, Zelaya later clarified that the bond will be issued not by the government but instead by the state-owned thermal energy company La Geo. He did mention though that the bonds will have a sovereign guarantee provided by the Salvadoran state.

When eventually launched, El Salvador's Bitcoin bond will be issued by Blockstream — a Bitcoin infrastructure company aiming to expand Bitcoin adoption using the blockchain developer's Liquid protocol. The Liquid Network is a Bitcoin layer-2 enabling the issuance of security tokens and other digital assets. The bonds will also be tradeable on the Bitfinix platform.

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