The Republic of El Salvador will issue $1 billion in bonds on Blockstream’s Liquid Network, described as a side-chain based settlement network for traders and exchanges operated and managed by its federated members. The bitcoin bond will be at a 10-year duration and a 6.5% coupon, which is about half the weighted coupon of El Salvador’s long-duration sovereign debt.
The total issuance will be split between a $500 million allocation in bitcoin and a $500 million spend for building out energy and bitcoin mining infrastructure in the region. Once the original $500 million had been monetized, half the additional gains will be shared with investors as the “Bitcoin Dividend”. On an annual basis, these dividends will be dispersed using Blockstream’s Asset Management Platform (AMP) to keep track of bond holders.
El Salvador is the first sovereign nation to accept bitcoin as legal tender. The country’s president Nayib Bukele said in a statement: “Our long-term commitment is to explore and develop a domestic platform to help facilitate the growth of our digital asset industry.”