Fitch Downgrades El Salvador to CCC Weeks Before Bitcoin Bond Issue

Fitch Downgrades El Salvador to CCC Weeks Before Bitcoin Bond Issue

Ratings agency Fitch has downgraded El Salvador’s long-term foreign currency issuer default rating (IDR) to CCC from B- weeks before the country starts issuing its bitcoin bond.

The downgrade reflects “heightened risk stemming from increased reliance on short-term debt, limited scope for additional local market financing, uncertain access to additional multilateral funding and external market financing given high borrowing costs,” Fitch said in a report on Wednesday.

The Central American nation faces close to $1.2 billion in external debt amortizations in 2023, with $800 million due in January, Fitch noted. Fitch also said that the country faces a financing gap of $1.2 billion in 2022, which will rise to $2.5 billion in 2023.