Ivory Coast will become the first African country since 2022 to issue a Eurobond. According to an announcement by the Ivorian President, Alassane Ouattara in Abidjan, the country is set to issue new Eurobonds next week.
Speaking at the event, Outtara noted, “The government will continue the structural transformation of the Ivorian economy, the acceleration of investments in many sectors such as digital technology and transport as well as the exploitation of recent oil and gas discoveries,”
However, he didn’t specify the amount of the Eurobond to be issued.
Søren Mørch, portfolio manager at Danske Bank Asset Management, speaking to Bloomberg, said, “Ivory Coast will – most likely – issue in dollars and in the 10-year tenor. They will be aiming to sell around 8.50% to 8.75% and an amount of between $1 billion to $1.25 billion.”
In line with the announcement by Alassane Outtara, yields on Ivory Coast’s July 2024 Eurobonds, dropped by 17 basis points on Monday, January 15, to trade at 8.36%.
What you should know
African countries have faced challenges accessing global debt markets ever since the US Federal Reserve started raising interest rates aggressively in 2022 to combat rising inflation.
However, as projections shift towards interest rate cuts by US Federal Reserve in 2024, there are indications of lower interest rates in the international bond market, which can make borrowing more attractive and affordable for governments.
2024 and 2025 are important maturity years for most of the Eurobonds issued by African countries. For example, Nigeria is due to redeem a $1.118 billion Eurobond in November 2025, after redeeming a $500 million Eurobond in July 2023.
The Eurobond market has been challenging for Nigeria and other African countries, as yield rates have surged due to both external factor such as US rate hikes and investor worries about debt sustainability.
For example, as of January 11, 2024, Nigeria’s November 2025 Eurobonds displayed a yield rate of 8.247%, compared to the initial issue rate of 7.625%, representing a 46.3 basis points increase from 7.784%, the closing yield of 2023.
Meanwhile, other African countries, such as Ethiopia, Ghana, and Zambia have defaulted on coupon payments for their Eurobonds. While Ethiopia failed to make its $33 million interest payment on its $1 billion bond, Ghana has suspended coupon payments on its Eurobonds since December 2022, in a move to restructure its commercial debts.
