El Salvador - Government officials are flirting with a passport scheme tied to volcano bond purchases
Finance minister Zelaya wants to issue volcano bonds in March
It is possible that government officials in El Salvador might attach a passport scheme to its volcano bond issuance.
The US$1bn volcano bond issuance is slated to be open by the end of March, according to El Salvador’s finance minster Alejando Zelaya. Wall St. is skeptical that it will be over-subscribed though. Institutional investors haven not seen the terms of the bond yet and there are obvious questions about how the capital will be deployed into a government-controlled Bitcoin allocation and geothermal energy infrastructure.
Institutional investors want to understand where their capital would go before plowing millions into a Salvadoran debt product, especially since Bukele has not shown bond investors there is much of a chance he will be able to make a January 2023 payment of US$800mn.
One of the ways president Nayib Bukele might attract bond buyers is to hang a passport scheme onto some minimum purchase amount. The idea was floated by Bitfinex in January and Max Keiser - who appears to be advising Bukele’s economic team on the bond - promotes El Salvador residency as a means of escaping pandemic-related measures and mismanaged currencies in developed world economies like Canada and Europe. The number $100,000 has been kicked around on youtube shows as the minimum purchase amount to qualify for a passport.
That’s probably why Bukele and his team are are sending out tweets that sympathize with Paris freedom demonstrators and Canadian truckers. If Bukele does hang a passport scheme onto the volcano bond purchases, he will need to drum up support for his country by selling it as a haven for Bitcoiners to not only practice their financial lives but also their civil lifestyles. Ramming Parisian and Ottawan authorities is sure to win over some members of the Bitcoin community.
Now the question is: how many Bitcoiners pay up the price Bukele sets for a passport and residency in El Salvador? He needs a lot of buyers if he wants to reach $1bn.