Has El Salvador's rating gone up because of Bitcoin?

El Salvador's credit rating has been upgraded by rating agency S&P Global Ratings. There are good reasons that the Bitcoin country's rating could rise even more in the coming months.

The creditworthiness of the Bitcoin country of El Salvador is bad. It is one of the countries with a high risk of default. Consequently, it is rated poorly by international rating agencies. Surprisingly, rating agency S&P Global Ratings has upgraded the country again, from CCC+ to B-. Although the country is still in the so-called junk sector, El Salvador has managed to stop the downward trend. Meanwhile, the rating agency's outlook is rated "stable."

Since the introduction of Bitcoin as a means of payment El Salvador has had to undergo several downgrades. One analyst told Bloomberg that progress has already been made in recent months. For example, he informed, "The government's recently launched program to gradually refinance its short-term debts with local banks will reduce the need for debt restructuring and reduce the risk of default over the next two years."

Bitcoin rate may help

Accordingly, the recovery of the Bitcoin exchange rate is not cited as a reason for the upgrade. But if the Bitcoin rate continues to recover and the country's Bitcoin projects, such as the construction of mining farms, succeed at the same time, it could have a positive impact on the small country's credit rating.

El Salvador holds 2,381 Bitcoin, or just US$85 million in the cryptocurrency. But since the Latin American country has only 6.5 million inhabitants and a debt of about US$25 billion, even small amounts can have a big impact.