El Salvador Buying Back Debt Following Bitcoin Losses

President Nayib Bukele insists the country can pay its debt despite losing more than 50% on its bitcoin investments

article-image

El Salvadorian President Nayib Bukele | Blockworks exclusive art by axel rangel

share

key takeaways

  • The value of the country’s junk-priced bonds increased by 10% to 40% following the buyback announcement
  • The buybacks will be financed partly by the IMF, which has criticized El Salvador’s bitcoin investment

El Salvadoran President Nayib Bukele once again wants to buy the dip — but instead of bitcoin, he’s eyeing his own country’s bonds. 

The controversial leader tweeted Tuesday that he sent two bills to El Salvador’s congress asking for authorization to take loans out and buy back sovereign debt bonds at market prices, which had dropped up to 75% over the past year.

Bukele’s move aims to reduce the government’s debt positions as some speculate El Salvador is near default.

El Salvador recognizes bitcoin as legal tender, and Bukele made waves the past year tweeting about his ill-timed bitcoin purchases using El Salvador’s sovereign wealth. 

Bukele has overall purchased 2,381 BTC for $107.15 million and is down over 50% on his investments, according to nayibtracker.com.

Nayib Bukele portfolio tracker | Source: Nayibtracker.com

Moody’s further downgraded the country’s debt rating in May, citing “bitcoin-related initiatives.” Bukele and his cabinet insist the proposed debt buybacks are not a result of financial mismanagement.

“El Salvador has the liquidity not only to pay all of its commitments when they are due, but also purchase all of its own debt (till 2025) in advance,” Bukele wrote, adding in a separate tweet the debt buybacks would be made “understanding the market price will probably move upwards once we start buying all the available bonds.”

El Salvador’s junk-grade bonds jumped in price following Bukele’s tweet, with bonds set to mature in 2023 rising over 10% and bonds maturing in 2025 up over 40%, according to Bloomberg.

The bills would finance El Salvador’s debt buyback through a $200 million loan from the Central American Bank for Economic Integration and reserve assets from the International Monetary Fund (IMF).

The IMF has been outspoken in its opposition to El Salvador’s bitcoin fixation, asking the country in January to remove bitcoin’s legal tender status over concerns the country’s debt was “unsustainable.”

El Salvador has not clarified the exact purpose of its buyback, though the proportion of the country’s revenue spent on debt interest payments has steadily risen since 2016, according to economics data platform Trading Economics.

For what it’s worth, IMF researchers previously outlined three “core objectives” behind sovereign debt buybacks: reducing debt payments, minimizing sovereign risk and adding liquidity to domestic markets. 

Still, past debt buybacks have been mostly unsuccessful in significantly reducing debt payments. In 1988, Bolivia bought back $34 million worth of commercial debt but only saw its debt payments shrink by $400,000, according to VoxEU.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens