By
Temitope Olatunji
April 26th, 2024
Morgan Stanley referred to El Salvadoran bonds at their current prices as a buying opportunity. El Salvadoran 2027 bonds have dropped from 32 cents to 28 cents this year.
American financial services company Morgan Stanley (NYSE: MS) has advised clients to consider buying El Salvadoran bonds. Many expect El Salvador’s economy to plummet as the crypto crash impacts the entire financial market. Instead of Bitcoin acceptance as a payment in the country to affect its economy, the nation is still managing not to default on its debt.
El Salvador is dealing with an $8 billion Eurobond payment due at the beginning of the coming year. According to the investment banking company, the government could continue to survive through the next year without defaulting on its bond payments. The Central American country has been in financial distress since Bitcoin lost more than 50% of its value, dragging other cryptocurrencies along the draining path. Morgan Stanley referred to El Salvadoran bonds at their current prices as a buying opportunity. El Salvadoran 2027 bonds have dropped from 32 cents to 28 cents this year. The slump signifies a record low of 26.3 cents last week.
Morgan Stanley Executive Says It Is Time to Buy El Salvadoran Bonds
Despite El Salvador’s financial situation, a Morgan Stanley executive is optimistic about the nation. The global head of emerging-market sovereign credit strategy, Simon Waever, believes the country is not likely to default on its debt payment. Weaver said El Salvador has the tendency to stay afloat amid the tightened global liquidity and general market condition. The Morgan Stanley market strategist added that the El Salvadoran bonds are “overly punished.” He estimated the 2027 bonds to be priced at 43.7 cents on the dollar instead of 28 cents. Weaver noted:
“Markets are clearly pricing in a high probability of the autarky scenario in which El Salvador defaults, but there is no reconstructing.”
There have been a lot of arising issues since El Salvador announced Bitcoin as a legal tender in September 2021. From adopting the top crypto as a legal tender, President Nayib Bukele has also launched BTC bonds. However, Bitcoin has massively lost its value since it became a legal tender in the Central American nation. Also, the International Monetary Fund (IMF) expressed its disapproval of the country’s pro-Bitcoin position. The international financial institution halted his discussion of giving a loan to El Salvador to help the nation sort its $8 billion Eurobond payment. IMF also argued that Bitcoin adoption would significantly risk El Salvador’s financial stability.
Regardless of the ongoings, Bukele remains optimistic about Bitcoin, purchasing another 80 BTCs on the 30th of June. The last purchase was the nation’s latest acquisition, with the president saying, “Bitcoin is the future.” Bukele bought the crypto asset at $19,000 each and tweeted, “thank you for selling cheap.”