The long-awaited issuance of El Salvador’s BTC Bonds is expected to take place between the 15th and 20th of March, as revealed by the country’s Minister of Finance, Alejandro Zelaya. The minister also confirmed that the bonds will be sold from US$ 100.
According to Zelaya, the bonds already have the necessary regulatory guarantees in El Salvador’s legal system. Thus, they will be listed on the stock exchange, as well as on Liquid, a network parallel to BTC (BTC).
In parallel, the bonds will also be traded on Bitfinex, which will serve to democratize access to them.
According to Zelaya, BTC Bonds will have a series of innovations. Firstly, payments in BTC and also in other cryptocurrencies. As a result, El Salvador will have access to a broader capital market from around the world.
“The advantage of BTC Bonds is that they accept payment in cryptocurrencies and BTC. This gives access to a capital market. By bringing in all these cash flows and receiving this type of money, there is a greater chance of sale and greater subscription, that is, greater offer for investors”, said the minister.
Secondly, the title will feature the innovation of having bonuses paid in BTC through direct purchase and mining projects. Of the $1 billion the government intends to raise, half will go towards building BTC City, a tax-free city maintained through BTC mining earnings.
The other US$ 500 million will be earmarked for the purchase of BTC by the government. If this operation generates a profit, 50% will be shared with the holders of the securities through semi-annual dividends. In addition, each bond will pay a return of 6.5% per annum.
“They (the bonds) will comply with all financial market regulations. One difference is that it will be done through the Liquid network, so there will be access possibilities for anyone who wants to invest US$ 100 in these securities. It is not necessary for the interested party to have a corridor or to have large capital”, said Zelaya.
Security and innovation
Zelaya highlighted that BTC Bonds will be normal securities like any other. In other words, the country will give them the same sovereign guarantee given to traditional debt securities. The big points of difference are the guarantees linked to BTC and the interest, 50% lower than other securities.
However, El Salvador’s investment grade is B-, which rates the country as highly speculative. The country is just five levels above default risk, but Zelaya assured that payments will be honored. “All risks have been considered and will be covered,” reiterated.