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El Salvador’s Dollar Bonds Drop on IMF Program Doubts Amid Trump’s Comments
July 25, 2024
El Salvador’s dollar bonds dropped across the curve by over 1 point. US Presidential candidate Donald Trump criticized El Salvador’s President Nayib Bukele’s policies to crack down on gang violence. He said that Bukele “doesn’t do a wonderful job” running the country in a campaign rally, noting that the Central American nation is sending criminals to the US. Analysts noted that El Salvador’s bonds were initially lifted by positive sentiment over the past few weeks on a optimism that the good relationship between Trump and Bukele could help the latter secure an IMF program, assuming Trump wins the election. Barclays strategist Jason Keene, has recommended its clients to sell El Salvador’s bonds due 2029 and is underweight on the bonds as they do not expect the country’s chances of an IMF deal to improve even if Donald Trump wins the US election. He added that “El Salvador’s lack of fiscal discipline and limited fiscal transparency continue to beleaguer negotiations between the two sides”.
El Salvador’s 8.625% 2029s were down by more than a point to 91.45, yielding 11.05%.
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