The government of El Salvador announced the first Bitcoin bonds to be issued by the end of March.
El Salvador’s Finance Minister Alejandro Zelaya told Frente a Frente TCS about the government’s plans to issue Bitcoin bonds between now and March 20.
The bonds will total $1 billion and are expected to be oversubscribed by an additional $500 million. The bonds will have a 6.5% annual interest rate and a ten-year maturity. Purchasing the securities will not require going through a stockbroker, but all purchasers will be obliged to pass a KYC procedure. The minimum investment amount will be $100. Technically, the bond issuance will be carried out on Blockstream’s Liquid Network sidechain with the support of specialists from iFinex.
Amid this news, Fitch Ratings downgraded the country’s long-term credit rating from B- to CCC. The main factors of the downgrade are named “policy unpredictability” and “the adoption of Bitcoin as legal tender.”
El Salvador plans to distribute the funds raised through Bitcoin bonds as follows:
- 50% to build the mining infrastructure and Bitcoin City;
- 50% to invest directly in Bitcoin (BTC).
As of February 10, 2022, El Salvador has 1.690 BTC in the Bitcoin fund, equivalent to ~73.3 million at the current exchange rate.