Moody’s Confirms El Salvador’s Ratings Unchanged After President Bukele’s Reactive Tweet
El Salvador President Nayib Bukele took on Twitter on Sunday, January 17, responding to a warning from rating agency Moody’s. However, Moody’s has confirmed that the Central American country’s ratings remain unchanged.
President Nayib Bukele Tweeted: “BREAKING: EL SALVADOR DGAF” which means “don’t give a fuck”. President Bukele was responding to a tweet from Investing.com.
BREAKING: EL SALVADOR DGAF https://t.co/VuJ25PcvQL
— Nayib Bukele 🇸🇻 (@nayibbukele) January 17, 2022
On Tuesday, January 18, Moody’s investor service told Bloomberg News that President Bukele seems to have taken the inaccurate tweet of downgrading as a fact. As of now, the rating remains unchanged from last July. In July 2021, Moody’s had already downgraded El Salvador’s rating to CCA1 which suggests a high risk of default on its debt.
Moody’s: El Salvador BTC Holdings A Riskier Bet
In its report, Moody’s has talked about the risks that Bitcoin trading poses to El Salvador’s sovereign credit rating.
Last week, the rating agency told Bloomberg that the Central American country’s Bitcoin holdings “certainly add to the risk portfolio,” especially for “a government that has been struggling with liquidity pressures in the past”.
Last year in September, the Bukele government Bitcoin a legal tender along with the U.S. Dollar. Since then, Bukele has been aggressively accumulating Bitcoins as the country holds 1391 BTC as of date, purchased via public funds. With the recent price drop for Bitcoin, El Salvador has seen an erosion of $12 million in wealth.
El Salvador bonds have been the worst performing for the year 2021 among other emerging markets. The country’s overseas bonds maturing in 2050 tanked to an all-time low of 53.6 cents on Tuesday, January 18. Furthermore, the country has also been issuing Bitcoin Volcano Bonds to capitalize on the excess geothermal energy that it produces.
President Bukele has been facing strong criticism over his decision from world leaders and eminent economists. However, Ark Invest CEO Cathie Wood, has praised Bukele’s Bitcoin push stating that it has given El Salvador citizens new financial opportunities which they didn’t have before.