El Salvador Vice President Felix Ulloa Says China ‘Offered To Buy’ Foreign Debt

China offered to help El Salvador refinance its external bond debt, according to Vice President Felix Ulloa. The Central American nation is looking to avoid defaulting on its dollar-denominated debt.

“China has offered to buy all our debt, but we need to tread carefully,” Ulloa told Bloomberg on Monday, responding to a question about potential debt restructuring. “We are not going to sell to the first bidder, we need to see the conditions.”

The vice president did not discuss more details on the offer, but it’s likely that the deal would be in the form of financing that would let the country buy its mounting debt back from bondholders. They have already started buying portions of their bonds back, and are targeting to repurchase more in January when $667 million in bonds will be due.

“The budget ministry along with the central bank are readying the conditions of the second buyback,” he said. El Salvador could use so-called special drawing rights, Ulloa added, or reserve assets held at the International Monetary Fund (IMF), to pay for the repurchase. The country currently has a debt rating of CCC+ from S&P Global Ratings, which puts them seven levels below investment grade.

The following day, Zhao Lijian, spokesman of the Chinese Foreign Ministry, said at a press briefing that he was not aware of such an offer. As of this writing, there have been no further comments from China on the matter. 

El Salvador has recently been making headlines for the country’s president Nayib Bukele’s wildly bullish bitcoin strategy.

While most of the country’s debt remains in distress, the president has remained aggressive in investing in bitcoin. Bukele’s “bitcoin is the future” gambit is estimated to have already cost the country as much as $300 million

Information for this briefing was found via Bloomberg, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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