Tuesday, 09 April 2024 03:26

El Salvador launches foreign debt buyback offer

Written by Karla Gutiérrez

This monday, El Salvador launched the offer to repurchase public debt maturing from 2025 to 2029. This official announcement was made by President Nayib Bukele through the social network X, in the afternoon hours.

"Today we have launched the buyback offer of our EXTERNAL DEBT, which matures from 2025 to 2029. All those who own bonds of the Republic of El Salvador can access this public and voluntary repurchase", posted President Bukele.

According to the details shared by President Bukele, three bond packages, or tranches, have been made available for this repurchase: the 2025 maturity, for US$347.92 million; the 2027 maturity, for US$800 million; and the 2029 maturity, for US$601.1 million. The salvadoran government will decide which offers it may take and which it may not, as market rules allow.

This is the third time that the Government has initiated this process to reduce the weight of foreign debt in the economy.

In short, the State offers to buy back in advance its own bonds, which are still in the hands of investors. By concluding the negotiations in a satisfactory and transparent manner, the government gets a heavy burden off its shoulders and the investor gets his profit sooner than he had expected.

After the buyback, the installments that the State pays from time to time for these commitments are lowered. For example, in the first two repurchase operations, the savings for the State was more than US$285 million, compared to waiting until the original maturity date.

It is worth mentioning that in 2022 the offer to repurchase external debt maturing in 2023 to 2025 was also announced, according to the government, the goal was to save between US$100 million and US$150 million.

In the same year, the Legislative Assembly approved initiatives aimed at allowing the Executive to make an early purchase of salvadoran sovereign debt bonds maturing in 2023 and 2025.

These strategies seek to alleviate the national economy and provide a revaluation of salvadoran bonds in the international market.


Translated by: A.M