LONDON: El Salvador’s adoption of bitcoin as legal tender has immediate negative implications for its credit rating, S&P Global said on Thursday.
S&P said the main risks were that it could threaten its hopes of securing a support programme with the International Monetary Fund, increase fiscal vulnerabilities and hurt banks by creating currency mismatches when they dish out loans.
“The risks associated with the adoption of bitcoin as legal tender in El Salvador seem to outweigh its potential benefits,” S&P said. “There are immediate negative implications for (the) credit”.
S&P currently rates the central American country at B- with a ‘stable’ outlook. Moody’s cut its El Salvador rating to Caa1, its equivalent of one rating notch below B-, at the end of July. It also kept the rating on a downgrade warning.
