El Salvador’s bonds maturing in 2027 have risen 62% in the past six months as the country’s fiscal position has improved.
There is an old saying in the market that the ratings of traditional institutions are lagging indicators. The recent experience of Bitcoin BTC 0.09% holder El Salvador also illustrates this point.
Since Fitch downgraded El Salvador’s debt rating in September 2022 and predicted the country would default on its debt in January 2023, the country’s junk-rated bonds have risen, mirroring Bitcoin’s meteoric rise throughout 2023.
El Salvador’s bonds have risen 62% in value and are now trading at 72 cents, according to market data. During the same period, Bitcoin has gained 79%.
El Salvadoran bonds have even outperformed the Invesco Emerging Markets Sovereign Debt ETF (PCY), one of the largest holders of the country’s debt, according to Factset.
