{"id":337220,"date":"2021-09-10T05:46:28","date_gmt":"2021-09-10T02:46:28","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/el-salvadors-bonds-suffer-as-bitcoin-law-takes-effect\/"},"modified":"2021-09-10T05:46:28","modified_gmt":"2021-09-10T02:46:28","slug":"el-salvadors-bonds-suffer-as-bitcoin-law-takes-effect","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/el-salvadors-bonds-suffer-as-bitcoin-law-takes-effect\/","title":{"rendered":"# El Salvador’s bonds suffer as Bitcoin Law takes effect"},"content":{"rendered":"

“# El Salvador’s bonds suffer as Bitcoin Law takes effect <\/strong>”
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El Salvador\u2019s move to embrace Bitcoin has ruffled the feathers of bond investors, with yields spiking as investors signal uncertainty for the emerging economy.<\/p>\n

A Sept. 8 report<\/a> published by Bloomberg notes the yield curve on El Salvador\u2019s bonds has recently inverted, meaning bonds with short-term maturities are now yielding more than is due from the instruments. It stated:<\/p>\n

\u201cThat\u2019s general<\/a>ly considered a bad sign as it means investors see shorter-term debt as riskier, and most yield curves will slope upwards given the inherent uncertainty of pricing things over the longer-term.”<\/p><\/blockquote>\n

Ben Emons of Medley Global Advisors emphasized that El Salvador\u2019s bonds lost significant ground \u201con the first day of its new Bitcoin Law,\u201d describing the market action as \u201can unwelcome sign that the wide use of Bitcoin may have major implications\u201d for the emerging country.<\/p>\n

Emons doesn\u2019t app<\/a>ear to be alone in his assessment, with Bloomberg\u2019s data showing that El Salvador\u2019s bonds began moving toward inversion in June \u2014 the same month during which the country\u2019s parliament passed President Nayib Bukele\u2019s controversial Bitcoin Law recognizing BTC as legal tender.<\/p>\n

Related: <\/em><\/strong>El Salvador’s largest bank partners with Flexa for Bitcoin payments<\/em><\/strong><\/p>\n

However, El Salvador\u2019s move to recognize Bitcoin as legal tender is not the sole force exerting bearish pressure on the country\u2019s bond market. <\/p>\n

Other pundits have emphasized Bukele\u2019s sudden ousting of the country\u2019s constitutional tribunal in May as a major source of negative sentiment regarding El Salvador\u2019s economic outlook, with Bukele having fired the country\u2019s attorney general and top judges. <\/p>\n

Since May, the spread between El Salvador\u2019s government bonds and comparable U.S. Treasuries had widened by 77%<\/a> as of August 12. Bukele\u2019s inability to secure a deal with the International Monetary Fund has also impacted the outlook of El Salvador\u2019s bond market.<\/p>\n

While El Salvador\u2019s Bitcoin Law took effect on Sept. 7, the rollout for the government-issued \u201cChivo\u201d digital wallet saw widespread complaints of technical issues from citizens.<\/p>\n