El Salvador, the first to make bitcoin legal tender, debt rating cut again at Fitch

El Salvador, the first to make bitcoin legal tender, debt rating cut again at Fitch


Seeking Alpha
2022-09-16 20:36:59

Once again, Fitch has downgraded El Salvador's long-term foreign currency issuer default rating to CC from CCC on Friday, further into junk territory. The country was the first to make bitcoin (BTC-USD) legal tender last year. Fitch pointed to the nation's weak fiscal liquidity positions "and extremely constrained market access amid high fiscal financing needs and a large USD800 million external bond maturity in January 2023 make default of some sort probable," it said in a report. El Salvador's financing needs were estimated to be $3.7B from September through January 2023, including $1B in fiscal deficit, $1.2B in amortizations and $1.5B in short-term debt, Fitch noted. The downbeat coverage followed Fitch's previous downgrade of El Salvador to CCC from B-, arguing that its bitcoin (BTC-USD) adoption had added uncertainty about financing that would be unlocked by an International Monetary Fund program for this year and the next. With bitcoin (BTC-USD) down some 70% from its November all-time high, El Salvador's BTC holdings are valued at less than what it had invested initially. The token slipped 1% to $19.65K at 4:36 p.m. ET. In January, IMF urged El Salvador to strip bitcoin of legal tender status.