The launch of the “volcano bonds”, that is, government bonds in Bitcoin, in El Salvador seems to have been postponed. The debut was expected between March 15 and 20, but it did not take place. The new speculation is that the launch will take place in September.
Launch of Volcano Bonds Delayed in El Salvador
The debut of Bitcoin bonds was scheduled for the third week of March, as announced by the local Finance Minister, Alexander Zelaya. To date, the investment vehicle has not yet been launched, suggesting that caution has prevailed.
After all, although the demand seems to be very high, Bitcoin is experiencing a time of strong volatility. It is plausible that the government of El Salvador wants to wait for a moment of calm in the markets.
But even before it sees the light of day, the tool is still making waves.
The sovereign debt revolution
Volcano Bonds will revolutionize the debt market as we know it today.
Have Bitcoin As collateral, guaranteeing a 6.5% return and promising a 50% dividend after 5 years is a bet on the price of Bitcoin.
The financial sector is skeptical, so much so that Fitch recently downgraded El Salvador’s credit rating from B- to CCC, blaming this decision on the very choice to have Bitcoin as legal tender.
However, according to the Minister of Finance, in statements collected in the Financial Times, the Bitcoin Bond already has orders for more than 1,500 million dollars. Far beyond the initial billion.
The point is that this instrument shows how El Salvador wants somehow to free itself from the dollar. However, the dollar is considered reliable, while Bitcoin is a little less so, at least by international finance majors.
Not surprisingly, the Telegraph reported verbatim that:
“Each new initiative, like El Salvador’s bitcoin bond, could undermine dollar supremacy a little bit, which could make the world a little harder to police and a little more dangerous.”
These statements were commented on by the president of El Salvador, Nayib Bukele:
“Each new initiative like El Salvador’s bitcoin bond could chip away at the greenback’s supremacy a little, potentially making the world that bit harder to police and a touch more dangerous.”
“Making the world that bit harder to police”? WTF?! https://t.co/9i0EEChbVR
– Nayib Bukele (@nayibbukele) March 22, 2022
Who added that:
“Bitcoin Fixes Colonialism!”
This explains why they are choosing Bitcoin: an independent currency and not directly linked to the United States.
Even an observer like Anthony Pompliano is of I agree that Volcano Bonds will be revolutionary:
In a tweet he said:
“El Salvador’s bitcoin-backed volcano bond appears to be setting the stage for a revolution in sovereign debt markets.”
When will Volcano Bonds be released?
According to Reuters, citing an interview with the finance minister, Alexander Zelayathe launch will take place no later than September 2022.
“In May or June the market variants are a bit different. At the latest in September. After September, if you go to the international market, it is difficult (to raise capital)”.
Thus, by September 2022, El Salvador will show the world the potential of your government bonds with which he plans to finance the construction of the first Bitcoin City in the world.