(Bloomberg) – The largest El Salvador dollar bonds rose in emerging markets on Thursday after law makers approved changes to the nation's Bitcoin law needed to secure an international financial fund loan.
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The government's debt obtained across the curve, with notes due in 2054 rising 2.7 cents on the dollar to 107 cents, according to indicative pricing data compiled by Bloomberg. The jump was a sign of investor optimism that a central American country was close to capturing the $ 1.4 billion deal with the IMF.
“This was the law they needed to pass” to get the multilateral funding, says Barclays strategist Jason Keene. “We expect to see the approval of the IMF Board in the coming weeks.”
The changes approved by Congress make it voluntary for businesses to accept Bitcoin as a type of payment. It also requires the government to pay its domestic and foreign obligations in the currency they have published, according to a report in the La Prensa Grafica newspaper.
The country has 6,049 Bitcoin in its reserves, worth about $ 636 million, and has been adding over the past seven days, according to a government account.
The El Salvador ambassador said to Milena Mayorga the United States that the nation was still committed to buying daily bitcoin and would host the “ecosystem” that supports digital assets, despite the new legislation.
Performance
El Salvador's dollar debt has given investors 30% gains over the last 12 months, about a triple the average gains across an index of emerging market sovereign bonds.
In 2021, El Salvador became the first country to adopt the cryptocurrency as a legal tender – along with the dollar – giving President Nayib Bukele's fame immediately as Bitcoin's pioneer and setting his country against the IMF, who opposed ' the idea.
After years of discussion, Bukele re -created and agreed to changes in law to comply with the IMF. That has helped drive prices in the bonds, some of which are now trading above a pair.
While bonds can continue to perform if the country presents further economic reforms, “an IMF deal is fully appreciated here,” said Thys Louw, portfolio manager at Ninety One UK Ltd.
-With help from Jim Wyss.
(Updates prices in the second paragraph, adds a joint -text starting fifth.)
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