Top cryptocurrency News: Morgan Stanley urges buyers to purchase battered El Salvador Eurobonds
The small country's bet on Bitcoin (BTC) largely backfired, as the major cryptocurrency trades at a discount of 70% from its ATH.
At a time when the Latin American nation is experiencing debt issues, Morgan Stanley has offered a buy recommendation for the battered Eurobonds.
According to sources, despite El Salvador having superior financial indicators than many of its counterparts, the country's bonds are unfairly penalized by market circumstances, according to Simon Waever, global head of emerging-market sovereign credit strategy at Morgan Stanley.
The note to investors reads that “markets have obviously factored a high possibility of the autarky scenario, in which El Salvador defaults but there is no restructuring, into their prices.”
Waever stated that a country's debt shouldn't trade below 43.7 cents on the dollar even in circumstances of default, but he also acknowledged that the level is impractical to reach in the present market environment owing to a lack of available global liquidity.
The Tuesday note predicted that El Salvador shouldn't face any difficulties paying back loans for the following year due to the primary surplus and the fact that it has lower maturities than other struggling countries like Argentina, Egypt, and Ukraine.
In September of last year, El Salvador declared bitcoin to be legal tender, and everything appeared to be working swimmingly for the country during the height of the bull market. Since September, the nation has bought about $56 million worth of bitcoin, and it has even used the proceeds to construct hospitals and schools. However, as the bear market started, the nation lost a sizable portion of its investment.
There were discussions about the possibility of a Bitcoin volcanic bond following the failure of a $1 billion bailout request to the International Monetary Fund (IMF). Although the bond and a Bitcoin city were both heavily publicized, there is still no precise timeframe for its launch.
