LatinNews Daily - 14 October 2024

*El Salvador’s President Nayib Bukele has announced that the government has accepted offers for debt repurchase totalling US$940.44m. On 4 October the Bukele government announced that it had launched the purchase offer for El Salvador’s external debt due from 2027 to 2052 for some US$7.2bn. A 10 October statement by international credit ratings agency Standard and Poor’s (S&P) Global Ratings in response to the announced tender offer however considers the debt repurchase “opportunistic and akin to a liability management operation, given that we believe the government could have fulfilled its financial commitments without this transaction”. The S&P statement notes that the offer is “another step in the broad debt reprofiling process that began in 2022, with two external debt repurchases in late 2022, a pension debt exchange in the first half of 2023, a short-term debt refinancing strategy started in October 2023, and another external debt repurchase in April 2024”. However, the credit ratings agency highlights the fragility of El Salvador’s public finances despite these measures citing “institutional weaknesses, as indicated by difficulties in predicting policy responses amid poor checks and balances” as well as “modest per capita GDP at US$5,350, and moderate GDP growth prospects due to persistently low investment and productivity”. It also highlights the country’s high debt burden which it puts at “about 77% of GDP (including debt owed to pension funds).”