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El Salvador Launches Debt Token

El Salvador Launches Debt Token

While volcano bonds remain a no-show, the Central American country with Bitfinex launched tokenized debt to finance a hotel complex.

  • The HILSV debt token aims to raise $6.25 million.
  • Like the volcano bonds, the HILSV token will circulate on the Bitcoin Liquid blockchain.

El Salvador launched, through Bitfinex, a debt token in the style of volcano bonds, with which it plans to raise the necessary capital to build and develop the Hampton by Hilton Hotel complex. The construction sits near the Salvadoran nation’s international airport. Bitfinex Securities announced today the launch of a debt token (HILSV) in El Salvador. The cryptoasset, issued by Inversiones Laguardia SA, grants access to an alternative form of microcredit to expand the country’s real estate market.

The HILSV debt token aims to raise $6.25 million with a 10% premium, a 5-year duration, and a minimum investment of $1,000, as reported by Bitfinex in an official statement. Like the volcano bonds, HILSV would circulate on the Bitcoin Liquid Network sidechain and trade in US dollars and the USDT stablecoin (Tether). Fundraising will begin next May 13 and will last approximately one month.

Volcano Bonds

The launch of the debt token comes just after the planned deadline for the issuance of bitcoin or volcano bonds, which the government promised for the first quarter of 2024. They previously said that the volcano bonds would be the first of their kind. “we want to position El Salvador in the international market,” as stated by the CEO of Tether and CTO of Bitfinex Securities, Paolo Ardoino.

Now, Ardoino himself points out that “the HILSV token marks the first tokenization of digital assets in El Salvador and represents an important step forward in the development of its nascent capital market, as well as in the introduction of a new and important asset class in the market.” In that sense, it is unknown what will happen with the volcano bonds, which consist of the issuance of $1 billion back in Bitcoin. They were announced in November 2021 by Bukele, shortly after passing the law recognizing Bitcoin as legal tender in the country.

As initially announced, They’ll distribute the proceeds from the volcano bonds 50% to expand the nation’s Bitcoin treasury, and the other 50% will go to energy infrastructure and digital mining works in the Bitcoin City.

No to bitcoin bonds, but yes to dollar bonds

And while the volcano bonds continue to disappear, El Salvador reappeared in the global debt markets with a dollar bond offering, with which the country could raise around $1 billion. Although the size of the deal is not entirely clear, Bloomberg reported. “Today, we have launched the offer to repurchase our external debt, which matures from 2025 to 2029. Everyone who owns the Republic of El Salvador bonds can access this public and voluntary buyback,” posted El Salvador’s President Nayib Bukele on his official account on the social network X.

The repurchase of sovereign debt bonds consists of El Salvador buying its debt before it matures in the hands of investors who prefer to sell the securities at market price. The operation generates savings because the government will not have to pay interest. The offer to buy the bonds began with the announcement of the President, and the settlement offered will conclude on Monday, April 15. The offer to purchase external debt bonds matures between 2025 and 2029 and has a valuation of 1,749 million dollars.

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