HomeCoinsBitcoin (BTC)Fitch Ratings Downgrades El Salvador Deeper Into Junk Status Citing Bitcoin Risks...

Fitch Ratings Downgrades El Salvador Deeper Into Junk Status Citing Bitcoin Risks – Finance Bitcoin News

- Advertisement -


One of the largest rating agencies in the U.S., Fitch Ratings, has downgraded El Salvador’s long-term default rating deeper into junk status, citing risks from adopting bitcoin as legal tender as a key reason. “The adoption of bitcoin as legal tender has added uncertainty about the potential for an IMF program that would unlock financing for 2022-2023,” Fitch detailed.

El Salvador Downgraded to Junk

Fitch Ratings downgraded El Salvador’s Long Term Foreign Currency Issuer Default Rating (IDR) from “B-” to “CCC” Wednesday. The American credit rating agency is one of the Big Three credit rating agencies. The other two are Moody’s and Standard & Poor’s (S&P).

For Fitch, bonds rated AAA, AA, A, or BBB are considered investment grade, while those rated BB, B, CCC, CC, C, or D are considered speculative, or junk grade, bonds. The company explained that CCC ratings mean “Substantial credit risk” with “Very low margin for safety,” and that “Default is a real possibility.”

The rating agency explained:

In Fitch’s view, 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.

The rating agency also said that “heightened financing risks stemming from increased reliance on short-term debt” ahead of an $800 million global bond payment due next January influenced its decision to cut El Salvador’s rating.

In July, Moody’s Investors Service downgraded the government of El Salvador’s long-term foreign-currency issuer and senior unsecured ratings from B3 to Caa1. The agency stated that El Salvador’s “outlook remains negative,” citing concerns over the use of bitcoin as legal tender in the country.

El Salvador made bitcoin legal tender alongside the U.S. dollar in September last year. Since then, the government of El Salvador has bought 1,801 bitcoins.

The International Monetary Fund (IMF) recently urged El Salvador to drop bitcoin as legal tender. The IMF also wants El Salvador to dissolve its fund used for conversion between bitcoin and dollars, noting the costs of adopting bitcoin as a national currency exceed the benefits. El Salvador, however, rejected the IMF’s call to abandon bitcoin as legal tender.

What do you think about Fitch Ratings downgrading El Salvador deeper into junk due to bitcoin risks? Let us know in the comments section below.

Fitch Ratings Downgrades El Salvador Deeper Into Junk Status Citing Bitcoin Risks – Finance Bitcoin News
Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.





Source link

- Advertisement -
Mr Bitcointehttps://www.bitcointe.com/
“Fact You Need To Know About Cryptocurrency - The first Bitcoin purchase was for pizza.” ― Mohsin Jameel
462FansLike
76FollowersFollow
4,567FollowersFollow
5,261FollowersFollow
1,579FollowersFollow
2,230SubscribersSubscribe

Most Popular

bitcoin
Bitcoin (BTC) $ 43,900.00
ethereum
Ethereum (ETH) $ 3,110.30
tether
Tether (USDT) $ 1.00
bitcoin-cash
Bitcoin Cash (BCH) $ 346.36
litecoin
Litecoin (LTC) $ 136.80
eos
EOS (EOS) $ 2.59
okb
OKB (OKB) $ 22.55
tezos
Tezos (XTZ) $ 4.20
leo-token
LEO Token (LEO) $ 6.13
cardano
Cardano (ADA) $ 1.17
monero
Monero (XMR) $ 182.18
stellar
Stellar (XLM) $ 0.235475
chainlink
Chainlink (LINK) $ 17.73
huobi-token
Huobi Token (HT) $ 10.01
tron
TRON (TRX) $ 0.069269
usd-coin
USD Coin (USDC) $ 0.991338
dash
Dash (DASH) $ 112.32
neo
NEO (NEO) $ 24.34
iota
IOTA (MIOTA) $ 0.965318
nem
NEM (XEM) $ 0.115603
zcash
Zcash (ZEC) $ 127.13
maker
Maker (MKR) $ 2,125.09
paxos-standard
Pax Dollar (USDP) $ 0.99893
ethereum-classic
Ethereum Classic (ETC) $ 35.21
vechain
VeChain (VET) $ 0.064553
true-usd
TrueUSD (TUSD) $ 0.9993
ftx-token
FTX Token (FTT) $ 45.34
kucoin-shares
KuCoin Token (KCS) $ 20.65
waves
Waves (WAVES) $ 11.19