I'm told by locals that LaGeo has been haemorrhaging technically-competent people for a while now.
The catch, I think, is that the bonds can be bought with dollars, bitcoins or tethers - a "dollar-substitute" crypto trading stablecoin whose backing seems to be made of squirrels and confetti. Coincidentally, tether is issued by iFinex, who are selling the bonds! So I think that's the first billion accounted for.
I don't know in detail what the scam is. But if you could quilt together a financial offering entirely from red flags ...
On Tether/iFinex, as you suggest, it's perfectly possible that they use their de-facto USDT printing press to buy all or most of the issuance, one way or another. The easiest thing would be to print $1 billion in USDT, and then "back it" up with the holdings of the volcano bonds they purchase... Wouldn't be surprised if they did this, honestly.
Also, your insight about LaGeo losing good people is worrying. It could be bad news for the company's operations down the line and it's ability to service its existing debt, neverminded the mammoth liability that the billion-dollar volcano bond will be... Hope you enjoyed the piece!!
I've been following the story of bitcoin in El Salvador since the announcement last June. Doing my best with Salvadoran contacts and Google translate ;-) I need to post an update, and your post will definitely be linked - I read the FT story, but it hadn't clicked what an unfeasible idea LaGeo doing the bonds would be. As Oscar Salguero notes, the government routinely treats public institutions as piggy banks.
it's very interesting that la geo will be issuing the volcano bonds for various reasons and seeing how corrupt the president of el salvador, his government and his ruling party are it becomes possible to pinpoint what their ultimate aim really is. la geo is one of the few successful state companies in el salvador because it turns in a profit of several millions annually, even though it is a small and limited company at the scale and standards of el salvador it is a true hen of the golden eggs. that said, we should look back at the recent history of this company from around the year 2002 and all the political and legal controversies it generated from its relationship to the italian company ENEL. the case was well documented about 8 years ago and it was called the "CEL-ENEL" case that saw arbitration, law suits and other civil disputes in different courts of law. but the bottom line was the covert attempt to privatize la geo because, well, it turns in significant profits for salvadoran standards. my suspision is that the bukele mafia will use all their power and influence, not to lead the country towards the path of development, but rather simply to emerge as a new, dominant economic group that can carve itself a place in the table of the true economic rulers of the country, the traditional oligarchs or "factic powers" like bukele used to call them when he was a presidential candidate and to which he has not made any mention of since he won the elections. the dynamics of current salvadoran politics point to rivalries and power struggles among the different economic groups. bukele is the face of a palestinian origin group that is transitioning from services and retail to invest heavily in power generation and energy technologies and their natural adversaries are another palestinian group headed by the siman family who has traditionally represented the industrial sector of the economy. bukele and his mafia have not shyed away from using all their political muscle to bully anyone who poses any contradiction to their manipulative agenda to run the system as they please; but being the thugs that they really are they will just flat out steal and rob the country to continue to amass wealth and power. you can look how they handled the 3 billion emergency fund to deal with the pandemic two years ago, for example. so my thesis is that the volcano bonds will be used as a decoy for the bukele mafia to privatize la geo and land it straight into their portfolio of power generating and energy production ventures already in place. the strategy is simple: use ifinex to print valueless tethers for 1 billion to buy the bonds, then default on the bonds, send the case to arbitration where la geo will be handed over as collateral and strip the state away from one of its most successful and profitable public companies. that's the scheme that has always worked in el salvador by previous privatizer governments. and just to show how salvadoran businessmen have seen CEL, the state company that owns la geo, as an ideal cash register to grab cash directly from...ex president funes appointed nicolas salume as president of cel during his time in office as a way to repay a 2 million personal loan to salume's father during his presidential campaign.
Frank, there's a piece in this story that I think you've forgotten or were not aware of. Samson Mow, perhaps one of the creators of the volcano bond idea (bitcoin bond architect as he calls himself), offered Blockstream to issue the volcano bond using the liquid network. However, a couple of weeks ago, Mow left blockstream to spend more time on the nation-states bitcoin adoption BullS*&$ (https://www.coindesk.com/business/2022/03/01/samson-mow-exits-blockstream-to-focus-on-nation-state-bitcoin-adoption/) according to himself. I wonder though whether Samson's Blockstream leave was related to the bond issuance, and what would be the implications of such move to the bond release. What are your thoughts about this?
Another interesting thing to think about is that Bukele's administration is urgently in need of funds. That means that the money raised by the bonds is actually needed to pay debt that is about to expire. To give you an idea, the debt service is a yearly bill of 1.2 billions; the treasury bonds (LETES and CETES) expiring this year (360 days short therm debt) accounts for 2.6 billion; and 800 million euro bond expiring in january 2023, not without mentioning a deficit budget of about 1.8 billion dollars. Shortly, Bukele needs resources desperately to roll over all those debts. The question is, how could Bukele buy bitcoins and fund bitcoin city with the 1 billion bond and pay back expiring debt at the same time?
And, just adding on top of Oscar Salguero comments, LaGeo is "a sort of" private institution funded with public money. As a private institution they're not obliged to make their operations transparent, that's why Chivo and Diario El Salvador where created using LaGeo as a sort of umbrella company. But if you think that LaGeo is the only company that Bukele is using to undercover his shady moves, last december another debt issuance was approved by Congress for the amount of 1.6 billion using two "autonomas", ANDA and Fovial, alegedly to raise funds for infraestructure investments (https://www.laprensagrafica.com/elsalvador/Ejecutivo-pide-titularizaciones-por-1600-millones-en-FOVIAL-y-ANDA-20211130-0085.html), both companies operation would be compromised by the issuance of those domestic bonds.
Hi Edwin, thanks very much for the comment and for reading! I was aware of the Samson Mow story (tweeted about it briefly yesterday), but I don't have any particular insights about it. It's a mystery to me. I don't know him or anyone at blockstream. The tweet-thread where he explains his departure doesn't contain anything fishy, but even if something fishy did happen, he wouldn't have said anything, so the absence of evidence is not evidence of absence. The timing is certainly eyebrow-raising. Plus the close ties to Tether/Ifinex/Bitfinex… (https://twitter.com/excellion/status/1498680531520827399?s=21)
On the dire need of funds... couldn't agree more. I elaborated on it (a little) in my initial two posts on the volcano bond (linked in the intro of this post), but didn't want to repeat it here to keep readers engaged. The 80 cent trading price of the 2023 bond suggest a 50% probability of default assuming like 40cents recovery value. Nevermind the longer dated bonds which are trading at deeper discounts, suggesting default is quite likely in the following 2-3 years. Without an IMF deal, it's looking very hard to stay solvent.
And thank you for the color/nuance about LaGeo. Will definitely use it in the post when they issue the volcano bond (or attempt the issuance and fail)...
Hi Oscar!! Thank you very very much for your detailed comment and all the information and links you provided. That probably took a while to write, and is extremely valuable information, so again, I really appreciate it.
I'm planning on writing another post on the volcano bonds when they are issued, so I will incorporate this background on LaGeo and CEL there. I speak Spanish, so no need to google translate ;) Would you be interested in a virtual coffee via zoom sometime to chat? There's just a lot in your comment that is very interesting I would want to know more about. Thanks in advance!!
You are another one from the 3% who opposes the government. I don't know much about crypto currencies; but I know how to spot a former ARENA/FMLN supporter when I see one.
Wow! For someone who has not voted, participated and lived in El Salvador, you seem to know more than the regular Joes who left the country due to the abuses from former administrations. You seem biased when it comes to name the current government "corrupt" while all the information you get is from other sources that brainwash people (like yourself.) The 3% actually may even be less due to the popularity of president Bukele and that is a fact. Yes, many things undisclosed can be interpreted by any as suspicious and lacking access by the masses to know was is going on behind the curtains.
I'm not a paid troll; (that is the typical name we get from the opposition, because we disagree with them and defy their way of thinking); just somebody like yourself with an opinion in regards of our perception of current politics.
I have actually been living in the US for more than 30 years and traveling back and forth to El Salvador. I can compare the before, during and after of former administrations; and now, I can sense things are changing, for the better. I invite you (If I may do so) for you to do the same and keep an open mind regarding El Salvador's' politics.
There is a lot we don't know about; that its true. But speculating gossips, half baked truths doesn't make them so. Sure, the current government is far from perfect with many things being questioned... but is working on improving the economy, infrastructure, education, hospitals, schools and more in just 3 years than the 2 previous leading parties did in 30. (And this is the part the nobody can deny.) Thank you for agreeing with and noting the the old corrupt parties gone and acknowledging the country is better by ridding of them.
Thanks for replying. I think you are a brilliant, smart and well informed person. You were doing so well, until you mentioned the Engel list. See? That "list" left out most of the corrupted public servants (politicians, ex-presidents, sponsors) and therefore when you defend something like that, your credibility goes out of the window.
And no. I don't have any proof whatsoever and neither do you, because you don't work or have work for the government, so anything you and I say is based on speculation alone. Your opinion is just as valuable as mine, until somebody with real proof debunks it (and I don't see any proof shown by the writer of this article) So yeah...there you have it. The US wants to control anything and everything. They decide who's good and who's bad? Come on! I guess Nicholas Maduro doesn't look now so evil after all with the ongoing war in Ukraine and the petroleum from Venezuela readily available. "Engel list"? Ha! What a joke!
( Cristiani, Parker, Ana Vilma Escobar, Mauricio Funes, Sanchez Ceren...does it ring a bell? The list goes on and on... how come there were never mentioned? You tell me.) They are all missing from the Engel list. That is proof enough. Look it up.
You can't have one without the other. You want transparency, you must be equally fair to bring about all the corrupted actors behind the stage. Otherwise, the whole thing lacks merit. Sorry to pop the bubble.
Thank you and wish you best of luck in your studies.
Doesn’t LaGeo know that bonds are the business of money printers? SMH
Honestly, I wonder when LaGeo found out they would be the ones issuing the Volcano bond and if they had any part in that decision...
I'm told by locals that LaGeo has been haemorrhaging technically-competent people for a while now.
The catch, I think, is that the bonds can be bought with dollars, bitcoins or tethers - a "dollar-substitute" crypto trading stablecoin whose backing seems to be made of squirrels and confetti. Coincidentally, tether is issued by iFinex, who are selling the bonds! So I think that's the first billion accounted for.
I don't know in detail what the scam is. But if you could quilt together a financial offering entirely from red flags ...
Hi! Thanks for reading and commenting :)
On Tether/iFinex, as you suggest, it's perfectly possible that they use their de-facto USDT printing press to buy all or most of the issuance, one way or another. The easiest thing would be to print $1 billion in USDT, and then "back it" up with the holdings of the volcano bonds they purchase... Wouldn't be surprised if they did this, honestly.
Also, your insight about LaGeo losing good people is worrying. It could be bad news for the company's operations down the line and it's ability to service its existing debt, neverminded the mammoth liability that the billion-dollar volcano bond will be... Hope you enjoyed the piece!!
I've been following the story of bitcoin in El Salvador since the announcement last June. Doing my best with Salvadoran contacts and Google translate ;-) I need to post an update, and your post will definitely be linked - I read the FT story, but it hadn't clicked what an unfeasible idea LaGeo doing the bonds would be. As Oscar Salguero notes, the government routinely treats public institutions as piggy banks.
my stuff on the story: https://davidgerard.co.uk/blockchain/tag/el-salvador/
it's very interesting that la geo will be issuing the volcano bonds for various reasons and seeing how corrupt the president of el salvador, his government and his ruling party are it becomes possible to pinpoint what their ultimate aim really is. la geo is one of the few successful state companies in el salvador because it turns in a profit of several millions annually, even though it is a small and limited company at the scale and standards of el salvador it is a true hen of the golden eggs. that said, we should look back at the recent history of this company from around the year 2002 and all the political and legal controversies it generated from its relationship to the italian company ENEL. the case was well documented about 8 years ago and it was called the "CEL-ENEL" case that saw arbitration, law suits and other civil disputes in different courts of law. but the bottom line was the covert attempt to privatize la geo because, well, it turns in significant profits for salvadoran standards. my suspision is that the bukele mafia will use all their power and influence, not to lead the country towards the path of development, but rather simply to emerge as a new, dominant economic group that can carve itself a place in the table of the true economic rulers of the country, the traditional oligarchs or "factic powers" like bukele used to call them when he was a presidential candidate and to which he has not made any mention of since he won the elections. the dynamics of current salvadoran politics point to rivalries and power struggles among the different economic groups. bukele is the face of a palestinian origin group that is transitioning from services and retail to invest heavily in power generation and energy technologies and their natural adversaries are another palestinian group headed by the siman family who has traditionally represented the industrial sector of the economy. bukele and his mafia have not shyed away from using all their political muscle to bully anyone who poses any contradiction to their manipulative agenda to run the system as they please; but being the thugs that they really are they will just flat out steal and rob the country to continue to amass wealth and power. you can look how they handled the 3 billion emergency fund to deal with the pandemic two years ago, for example. so my thesis is that the volcano bonds will be used as a decoy for the bukele mafia to privatize la geo and land it straight into their portfolio of power generating and energy production ventures already in place. the strategy is simple: use ifinex to print valueless tethers for 1 billion to buy the bonds, then default on the bonds, send the case to arbitration where la geo will be handed over as collateral and strip the state away from one of its most successful and profitable public companies. that's the scheme that has always worked in el salvador by previous privatizer governments. and just to show how salvadoran businessmen have seen CEL, the state company that owns la geo, as an ideal cash register to grab cash directly from...ex president funes appointed nicolas salume as president of cel during his time in office as a way to repay a 2 million personal loan to salume's father during his presidential campaign.
Thank you for the comment!! That's an interesting and machiavellian theory about what the gameplan is... I guess we'll find out.
Frank, there's a piece in this story that I think you've forgotten or were not aware of. Samson Mow, perhaps one of the creators of the volcano bond idea (bitcoin bond architect as he calls himself), offered Blockstream to issue the volcano bond using the liquid network. However, a couple of weeks ago, Mow left blockstream to spend more time on the nation-states bitcoin adoption BullS*&$ (https://www.coindesk.com/business/2022/03/01/samson-mow-exits-blockstream-to-focus-on-nation-state-bitcoin-adoption/) according to himself. I wonder though whether Samson's Blockstream leave was related to the bond issuance, and what would be the implications of such move to the bond release. What are your thoughts about this?
Another interesting thing to think about is that Bukele's administration is urgently in need of funds. That means that the money raised by the bonds is actually needed to pay debt that is about to expire. To give you an idea, the debt service is a yearly bill of 1.2 billions; the treasury bonds (LETES and CETES) expiring this year (360 days short therm debt) accounts for 2.6 billion; and 800 million euro bond expiring in january 2023, not without mentioning a deficit budget of about 1.8 billion dollars. Shortly, Bukele needs resources desperately to roll over all those debts. The question is, how could Bukele buy bitcoins and fund bitcoin city with the 1 billion bond and pay back expiring debt at the same time?
And, just adding on top of Oscar Salguero comments, LaGeo is "a sort of" private institution funded with public money. As a private institution they're not obliged to make their operations transparent, that's why Chivo and Diario El Salvador where created using LaGeo as a sort of umbrella company. But if you think that LaGeo is the only company that Bukele is using to undercover his shady moves, last december another debt issuance was approved by Congress for the amount of 1.6 billion using two "autonomas", ANDA and Fovial, alegedly to raise funds for infraestructure investments (https://www.laprensagrafica.com/elsalvador/Ejecutivo-pide-titularizaciones-por-1600-millones-en-FOVIAL-y-ANDA-20211130-0085.html), both companies operation would be compromised by the issuance of those domestic bonds.
Hi Edwin, thanks very much for the comment and for reading! I was aware of the Samson Mow story (tweeted about it briefly yesterday), but I don't have any particular insights about it. It's a mystery to me. I don't know him or anyone at blockstream. The tweet-thread where he explains his departure doesn't contain anything fishy, but even if something fishy did happen, he wouldn't have said anything, so the absence of evidence is not evidence of absence. The timing is certainly eyebrow-raising. Plus the close ties to Tether/Ifinex/Bitfinex… (https://twitter.com/excellion/status/1498680531520827399?s=21)
On the dire need of funds... couldn't agree more. I elaborated on it (a little) in my initial two posts on the volcano bond (linked in the intro of this post), but didn't want to repeat it here to keep readers engaged. The 80 cent trading price of the 2023 bond suggest a 50% probability of default assuming like 40cents recovery value. Nevermind the longer dated bonds which are trading at deeper discounts, suggesting default is quite likely in the following 2-3 years. Without an IMF deal, it's looking very hard to stay solvent.
And thank you for the color/nuance about LaGeo. Will definitely use it in the post when they issue the volcano bond (or attempt the issuance and fail)...
Hi Oscar!! Thank you very very much for your detailed comment and all the information and links you provided. That probably took a while to write, and is extremely valuable information, so again, I really appreciate it.
I'm planning on writing another post on the volcano bonds when they are issued, so I will incorporate this background on LaGeo and CEL there. I speak Spanish, so no need to google translate ;) Would you be interested in a virtual coffee via zoom sometime to chat? There's just a lot in your comment that is very interesting I would want to know more about. Thanks in advance!!
You are another one from the 3% who opposes the government. I don't know much about crypto currencies; but I know how to spot a former ARENA/FMLN supporter when I see one.
Wow! For someone who has not voted, participated and lived in El Salvador, you seem to know more than the regular Joes who left the country due to the abuses from former administrations. You seem biased when it comes to name the current government "corrupt" while all the information you get is from other sources that brainwash people (like yourself.) The 3% actually may even be less due to the popularity of president Bukele and that is a fact. Yes, many things undisclosed can be interpreted by any as suspicious and lacking access by the masses to know was is going on behind the curtains.
I'm not a paid troll; (that is the typical name we get from the opposition, because we disagree with them and defy their way of thinking); just somebody like yourself with an opinion in regards of our perception of current politics.
I have actually been living in the US for more than 30 years and traveling back and forth to El Salvador. I can compare the before, during and after of former administrations; and now, I can sense things are changing, for the better. I invite you (If I may do so) for you to do the same and keep an open mind regarding El Salvador's' politics.
There is a lot we don't know about; that its true. But speculating gossips, half baked truths doesn't make them so. Sure, the current government is far from perfect with many things being questioned... but is working on improving the economy, infrastructure, education, hospitals, schools and more in just 3 years than the 2 previous leading parties did in 30. (And this is the part the nobody can deny.) Thank you for agreeing with and noting the the old corrupt parties gone and acknowledging the country is better by ridding of them.
Thank God!
Thanks for replying. I think you are a brilliant, smart and well informed person. You were doing so well, until you mentioned the Engel list. See? That "list" left out most of the corrupted public servants (politicians, ex-presidents, sponsors) and therefore when you defend something like that, your credibility goes out of the window.
And no. I don't have any proof whatsoever and neither do you, because you don't work or have work for the government, so anything you and I say is based on speculation alone. Your opinion is just as valuable as mine, until somebody with real proof debunks it (and I don't see any proof shown by the writer of this article) So yeah...there you have it. The US wants to control anything and everything. They decide who's good and who's bad? Come on! I guess Nicholas Maduro doesn't look now so evil after all with the ongoing war in Ukraine and the petroleum from Venezuela readily available. "Engel list"? Ha! What a joke!
( Cristiani, Parker, Ana Vilma Escobar, Mauricio Funes, Sanchez Ceren...does it ring a bell? The list goes on and on... how come there were never mentioned? You tell me.) They are all missing from the Engel list. That is proof enough. Look it up.
You can't have one without the other. You want transparency, you must be equally fair to bring about all the corrupted actors behind the stage. Otherwise, the whole thing lacks merit. Sorry to pop the bubble.
Thank you and wish you best of luck in your studies.