El Salvador to Offer Bitcoin Bond in March
El Salvador intends to complete the final preparations for the issuance of its first $1 billion in Bitcoin bonds between March 15 and March 20. According to Alejandro Zelaya, the country’s finance minister, the country’s oversubscription of securities would amount to “at least $500 million.”
According to the official, the $100 minimum purchase as well as the absence of a broker during the placement would boost the number of potential investors in the pool. According to Finance Minister Alejandro Zelaya, El Salvador’s first $1 billion bitcoin bond will be issued between March 15 and March 20, with the proceeds going to charity.
Zelaya said that the bond, which would have a 6.5 percent coupon, will be published on Liquid, a bitcoin-based website established by Blockstream, and that it will be featured on the Salvadoran television program “Frente a Frente.” The use of Liquid, according to Zelaya, would let investors to engage in the transaction with as little as $100.
Bonds will be subject to “all applicable financial market laws,” he said in his conclusion. “All [know-your-customer] requirements, as well as all due diligence, will be performed,” says the CEO.
CoinDesk reported in December that the bond has already received soft commitments in the amount of $300 million from Blockstream’s chief strategy officer, Samson Mow. President Nayib Bukele of El Salvador said in November that half of the $1 billion collected will be used to assist in the development of necessary energy and bitcoin mining infrastructure, with the other half being used to expand the country’s bitcoin holdings.
As El Salvador’s president Nayib Bukele shared the stage with Blockstream chief strategy officer Samson Mow on November 20, it was the first time that the bitcoin bond idea was introduced to the general public. Mow went into depth about the bond’s stipulations, while Bukele disclosed his plans to develop Bitcoin City, a new crypto-friendly municipality in the United Kingdom.
Even though crypto enthusiasts are thrilled about the bonds and are likely to be interested in purchasing them in order to leave their mark on history, some financial experts have questioned whether they are a good investment and will attract a sufficient number of investors.
It was recently revealed that some of the International Monetary Fund’s directors are “concerned about the hazards associated with issuing Bitcoin-backed bonds,” which is a reference to El Salvador’s rumored negotiations for a $1.3 billion loan. Meanwhile, according to Reuters, the nation has a bond maturing in January 2023 for $800 million dollars.
A 6.5 percent coupon will be paid on El Salvador’s first bitcoin bond, which will mature in 2032, according to a presentation made in November of this year. During the conversation, Zelaya also made mention of the coupon in question. According to the country’s plans, half of its new cryptocurrency would be used for bitcoin purchases, with the other proceeds going toward energy infrastructure and mining.
When Bukele and Mow first announced the bonds, Bitfinex Securities was identified as the bookrunner for the transaction. According to the company’s parent company, iFinex Inc., an agreement with the government of El Salvador “outlines a collaboration on the creation of digital assets and a securities regulatory framework to regulate, issue, and operate digitized financial instruments in El Salvador,” was reached on November 19.