Successful repurchase of El Salvador bonds generates savings of $275 million

Successful. The President of the Republic, Nayib Bukele, reported on Wednesday afternoon that the creditors of national bonds responded positively to the proposal to buy back Salvadoran bonds maturing in 2023 and 2025, announced on September 12.

“El Salvador has successfully completed the first advance purchase operation of bonds maturing in 2023 and 2025; managing to repurchase bonds for more than $565 million,” the official wrote on Twitter.

Bukele also pointed out that the success of this financial maneuver, which is executed for the first time in the country’s history, will allow savings of $275 million. This moment surpassed the initial projection of the Government that save between $100 million to $150 million through the anticipated purchase.

The president stressed that the operation “was so successful” that in eight weeks he will launch another offer for the remainder of the bonds.

For the economist and former president of the Central Reserve Bank (BCR), Carlos Acevedo, El Salvador saved more than $200 million with the early repurchase operation of its bonds.

In his opinion, the buyback is “successful” especially in the case of the 2025 bond with the purchase of more than half and “a saving of almost $200 million with respect to face or face value and payment of interest” .

In this regard, the vice president of the firm Exor Latin America, César Addario, explained that “the republic accepted offers to tender $133 million of its 2023 bonds and $432 million of its 2025 bonds.”

In other words, of the $800 million of the bonds maturing in 2023, the country only has $667 million in the market, and with respect to those of 2025, a pre-purchase of more than 50% was achieved, since of the $800 at stake there are now $368 million.

“El Salvador had established a purchase price of $910 for bonds due in 2023, and $540 for bonds due in 2025,” added the expert.

For Addario, this unprecedented operation in the country’s history represents a significant reduction in foreign debt that will have a positive impact on El Salvador’s credit risk.

“After this saving of repurchase and lowering of the external debt in the market, it is time for additional economic announcements, to redirect the curve and lower the EMBI, with this the repurchase of will have the expected positive impact on the country’s credit risk.”

The Government made available for the execution of this operation $360 million of Special Drawing Rights (SDR) that were granted by the International Monetary Fund (IMF) to its member countries to act during the COVID-19 pandemic, in addition to pending disbursements from the Inter-American Development Bank (IDB) and the Central American Bank for Economic Integration (CABEI), indicated the Minister of Finance, Alejandro Zelaya.