El Salvador’s dollar bonds rose by up to 2 points across the curve after President Nayib Bukele appointed former IMF official Alejandro Werner as adviser. Markets are taking this as an effort by the government to shore up its finances. The nation has been trying for long to secure a deal with the IMF, trying to negotiate a possible $1.3bn loan since March 2021. However, the multilateral lender has highlighted the nation’s adoption of Bitcoin as legal tender as a major hurdle. “They are showing the market and bondholders they are working to further right the ship. All steps they have taken are moving toward a more favorable outlook”, said Oren Barack, MD of fixed income at Alliance Global Partners. A Bloomberg index of El Salvador’s dollar bonds show a return of 28% YTD on average, making them the best performing EM sovereign.

El Salvador’s bonds are trading at over 53 cents on the dollar.

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