Investors in El Salvador international bonds are relishing 60% returns this year alone.
El Salvador's President Nayib Bukele speaks during a ceremony to lay the first stone of a new public hospital, in San Salvador, El Salvador June 15, 2023. REUTERS/Jose Cabezas/
Fast forward 12 months and two surprise debt buybacks have left the country's payment schedule very light until 2027, while the appointment of a former IMF official as adviser to the finance ministry has sent the right signals to markets, investors say. A bond maturing in 2025 is trading at 89 cents, up from about 27 cents a year ago.
"Bukele has one of the highest approval rates and he has managed that successfully, and there's also an understanding that you have to make sure that the country continues to have access to the market... it's a dollarized economy," said Shamaila Khan, head of fixed income for Emerging Markets and Asia Pacific, UBS Asset Management.
"In a year where carry is the main driver of total returns, investors are going to be reticent to take profits too early," said BNP Paribas' Nathalie Marshik, a managing director for Latin America fixed income.
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