China offers to buy El Salvador’s debt
In a recent move, Xi Jinping declared that he was willing to buy El Salvador's debt in order to help the Central American country refinance its foreign obligations
This Monday, China’s offer to buy the debt of El Salvador, a pro-cryptocurrency Central American country, was announced as a measure to help refinance its external obligations.
The vice president of El Salvador, Félix Ulloa, said this week that China offered to buy the debt and thus prevent it from falling into default. It is important to note that according to Moody’s, S&P and Fitch Ratings, the nation “currently has the lowest risk rating in Central America.”
Ulloa told Bloomberg during an event in Madrid, Spain, that the Asian country made the offer to buy his country’s debt, which currently has a CCC+ rating from S&P Global Ratings. This is seven notches below investment grade.
The main reason for this strategy launched by Xi Jinping would be to help El Salvador avoid falling into default, taking into account that it currently has 670 million dollars in bonds maturing on January 24.
El Salvador is at a crossroads. Even if it can avoid a sovereign default in 2023, “in our baseline, the reserves would disappear if the government paid the redemption of the 2025 eurobonds,” Oxford Economics analysts Felipe Camargo and Lucila Bonilla noted in an October note.
M.Pino
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Source: elfinanciero
