Fitch Ratings downgradedEl Salvador 's credit further into junk territory in light of itsbitcoin adoption.- The ratings agency also cited an $800 million bond due next year and increased reliance on short-term debt.
El Salvador received a credit downgrade due in part to its bitcoin adoption and crypto-loving president.
In a Wednesday report,
Besides the country's
El Salvador made bitcoin a form of legal tender in September and announced in November it would launch a $1 billion, 10-year bitcoin bond via Blockstream. While the country has grown in popularity for its embrace of bitcoin, ratings agencies have been less enthused.
Fitch's downgrade follows a similar move from Moody's last year and a warning last month that the country's default risk would increase if it keeps up its bitcoin buying spree. President
In its report, Fitch said "weakening of institutions and concentration of power in the presidency have increased policy unpredictability, and the adoption of bitcoin as legal tender has added uncertainty about the potential for an IMF program that would unlock financing for 2022-2023."
A previous analysis by Bloomberg found El Salvador has about 1,391 bitcoins in its coffers and may have lost an estimated $10 million amid the bitcoin rout this year. As the market slumped in January, Bukele said he "bought the dip," adding 410 bitcoins to El Salvador's stash for $15 million.