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Bond Market News
El Salvador Receives IMF’s Support
September 11, 2026
El Salvador reached a staff-level agreement with the IMF on the overdue second and third reviews for its $1.4bn program. The update comes after nearly a year of delays and could potentially unlock about $140mn following executive-board approval. Progress cited by the IMF includes transferring majority ownership of the government-backed Chivo digital wallet to a private operator and providing evidence that Bitcoin accumulated since the first review was financed through private donations rather than public funds. Strong economic growth has also improved fiscal metrics, with activity expanding 5.2% YoY in May and June, supported by a construction boom and increased investment. However, investors remain focused on pension reform, now expected in 2027 rather than this year. The reform is critical given El Salvador’s structural pension deficit and the 2027 expiration of a four-year grace period on interest payments owed to private pension funds. Approval of the IMF reviews by early October would also trigger a coupon reduction on interest-only notes to 0.25% from 4%, potentially providing further support. Nevertheless, analysts caution that El Salvador’s bonds already trade at relatively tight spreads for their rating, leaving limited room for disappointment.
Its 7.65% 2035s have traded up about 1 point since beginning of the month to 103.8, yielding 7.05%.
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– Jody L
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