If El Salvador buys more bitcoin, it can enter a risk zone, says Moody’s

The adoption of bitcoin (BTC) in El Salvador brought with it that international risk rating agencies will stare at every move made by the president of the Central American country, Nayib Bukele, with the cryptocurrency.

For example, the US risk rating agency, Moody’s, considers that the management of bitcoin by the Government of El Salvador can take the country to a risk zone. The financial firm says that the situation in El Salvador “was weak and reflects a growing possibility of non-compliance” with the payment of the debt.

The country’s external debtamounts to USD 18,450 million, according to the Central Bank.

“It’s quite risky, particularly for a government that has been struggling with liquidity pressures in the past,” Moody’s analyst Jaime Reusche told the Times. agencia Bloomberg .

So far, according to publicly available information, El Salvador has bought 1,391 bitcoins.

Salvadoran President Nayib Bukele considers that he missed the opportunity to buy cheap bitcoin. Source: Twitter account of the president of El Salvador, Nayib Bukele.

Several of his purchases were made on BTC price drops, although he was unable to do so on the last one. “I think I might have missed the fall this time,” wroteBukele on Twitter, due to the low prices that bitcoin has registered, today, January 14.

According to Moody’s calculations, after the recent drop in bitcoin prices, El Salvador could have lost between USD 10 and USD 20 million.

Moody’s: if they don’t buy more bitcoin it will be positive

Something that can give El Salvador hope, according to Reusche, is that the country’s bitcoin holdings do not represent a “major threat” to the government’s ability to meet its international obligations.

Although the analyst warned that the risks could be higher if the government buys more bitcoin, especially, for the payment capacity and its fiscal profile.

El Salvador’s Bitcoin Bonds also worry Moody’s

Moody’s also referred to the bitcoin-backed bonds to be launched by the Government of El Salvador.

In this regard, Reusche said that “selling a decent amount of Bitcoin bonds could help them with their liquidity pressures.”

According to the risk rating agency analyst, the condition for El Salvador not to have to restructure its traditional market bonds will depend on the bitcoin-backed bonds being “well received and oversubscribed.”

The Central American country seeks to raise USD 1,000 million through these bonuses that will be available in February and March of this year. The money will be used both to build the Bitcoin City, as well as to acquire more bitcoin, as reported by CriptoNoticias.

An international body that also warned on the purchase of BTC on the part of El Salvador, it was the International Monetary Fund (IMF). Last November, the financial institution’s director of communications, Gerry Rice, said that this movement “raises a series of macroeconomic, financial and legal problems.”

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If El Salvador buys more bitcoin, it can enter a risk zone, says Moody’s

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