Gabon has just closed a Eurobond of 800 million USD or 458 billion XAF at 7% interest rate for a 10-year maturity. The transaction closed on Wednesday, November 17 on the international financial market. This is a much more expensive loan than those made by the Ivory Coast, Benin and Senegal.
In February 2021, Côte d’Ivoire had mobilized $ 800 million at a rate of 4.3% for a maturity set in 2032.
Last July, Cotonou raised a loan of 500 million euros maturing in 2035 at a rate of 4.95%. Previously, in June 2021, Dakar had done the same, mobilizing 775 million euros at a rate of 5.375% on a 16-year maturity. Why is Gabon borrowing on such expensive terms?
Some evoke a degraded country risk, a relative macroeconomic balance and, above all, the fact that this Eurobond is intended to repay a precedent, that of 2013, of similar maturity and due in December 2024. The only problem is the new Eurobond. is made at a more expensive rate than the previous one denominated at 6.75%. The debt wall has been pushed back, but it turns out to be higher. However, the reverse is often observed: debt is smoothed out by taking advantage of market conditions to borrow at a lower cost to repay onerous debts.
Of course, market conditions have tightened. The end of liquidity injections by central banks has made liquidity more expensive, which partly explains the parameters of the Gabon loan. The government also notes an “exceptional performance in relation to market conditions, and in particular those which applied to the existing emissions of Gabon”. Gabon’s indebtedness remains to be watched. The country rated B- by Fitch (against CCC previously) has entered into a three-year 2021-2023 agreement with the International Monetary Fund (IMF), in support of the implementation of the Transformation Acceleration Plan (PAT).
In its 2022 finance bill, Gabon devotes about 40% to debt service, a high level again compared to the countries of the sub-region mentioned above. Libreville, however, borrowed cheaper than Accra which had closed a eurobond of $ 3 billion last April for a rate between 7.75% and 8.625% on maturities between 4 years (zero coupon) 7 and 12 years.
