On Sunday, January 17, El Salvador President Nayib Bukele turned to Twitter in response to a rating agency Moody’s warning. According to Moody’s, the Central American country’s ratings remain constant.
“BREAKING: EL SALVADOR DGAF,” President Nayib Bukele tweeted, which means “don’t give a fuck.” President Bukele was replying to Investing.com’s tweet.
According to Moody’s investor service, President Bukele seems to have accepted the incorrect tweet of a downgrade as reality. The rating is now unchanged from last July. El Salvador’s credit rating was already cut to CCA1 by Moody’s in July 2021, indicating a significant chance of default on its debt.
BTC Holdings in El Salvador: A Riskier Bet
Moody’s has discussed the concerns that Bitcoin trading presents to El Salvador’s government credit rating in its assessment.
According to Bloomberg in the previous week, the Central American nation’s Bitcoin holdings surely add to the risk portfolio, particularly for an administration that has previously struggled with liquidity pressures.
In September of last year, the Bukele government declared Bitcoin legal money alongside the US dollar. Bukele has been actively acquiring Bitcoins since then, with the nation now holding 1391 BTC acquired using public funding. Unfortunately, El Salvador has lost $12 million in value due to the recent dip in Bitcoin’s price.
Among developing markets, El Salvador’s bonds had the lowest performance in 2021. On Tuesday, January 18, the country’s 2050 foreign bonds fell to an all-time low of 53.6 cents. In addition, the nation has begun issuing Bitcoin Volcano Bonds to profit from the extra geothermal energy it generates.
President Bukele has been under fire from international leaders and respected economists for his choice. Bukele’s Bitcoin push, on the other hand, has been welcomed by Ark Invest CEO Cathie Wood, who claims that it has provided El Salvador locals with new financial alternatives that they did not have previously.