Bloomberg, the specialized media outlet, recently reported that Salvadoran bonds had the “best performance in emerging markets” on Tuesday. Investors applaud the actions of President Nayib Bukele’s government to shore up the country’s finances. According to the publication, the 2025 bonds recorded the highest level since September 2021.
Although the nation’s sovereign spread still shows risk, the bonds have returned an average of 28% this year, making El Salvador’s debt the best-performing in emerging markets so far in 2023, according to Bloomberg data.
Exor Latinoamérica, a financial services company, reported that the value of this sovereign bond rose from $66.05 on January 9 to $81.50 yesterday. Meanwhile, its yield fell from 28.50% to 18.52% during the same period.
The negotiations with creditors allowed the debt with a maturity date of 2025, for $800 million, to be reduced to $349 million. “The repayment of a key $800 million bond maturity in January helped restore some investors’ confidence,” the news outlet highlighted.
Bloomberg also noted that one of the keys to improving El Salvador’s prospects in the markets has been the payment of the 2023 eurobond. In January, the Salvadoran government paid $604 million plus $23 million in interest generated by the debt, as it advanced the maturity date with two repurchase offers made last year, in which it repurchased $647 million in the 2023 and 2025 securities. These operations generated $288 million in savings for the state coffers.
These considerations coincide with Exor’s predictions since 2022 that the effective payment of the debt with a maturity date of 2023 contributes to improving the country’s credit risk and confidence in the international market.
Bloomberg also cites Katrina Butt, senior economist at AllianceBernstein LP. Werner, who stated that “investors have more confidence in El Salvador’s prospects.”
In the midst of this situation, President Bukele shared the publication of the digital newspaper on Twitter with the comment: “I’m not going to say: I told you so,” referring to the institutions’ warnings that the country would default or would not be able to meet its commitments.
In another article, the same international media outlet reported that El Salvador had hired Alejandro Werner, a former International Monetary Fund (IMF) official, as an advisor, “as a way to advance in its search for an agreement with the multilateral.” Werner retired as head of the IMF’s Western Hemisphere Department in 2021. During his time, he led negotiations with Latin American countries, including the record $56 billion loan to Argentina in 2018.
His appointment as an advisor aims to strengthen the country’s relationship with the IMF and improve El Salvador’s financial situation, given the current scenario of the global economy.