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AGF Magazine - March 2019 issue

  • We focus on fixed income opportunities in both public and private markets. Read on to find in which fixed income instruments and in which African markets to invest on pp. 10-11. In addition, Ashley Benatar of Ashburton Investments shares his views on benefits and risks of investing in mezzanine debt on p.22.
  • We speak with Jérémie Ceyrac, Head of Equity, Responsible Investments at Proparco to learn more about the French development institution, financial products on offer, recent investments in Africa and African impact investment scene (pp. 13-15).
  • This month’s market feature focuses on Nigeria. Sven Richter, Fund Manager, Drakens Capital, writes about his recent trip to the West African country and his observations. “While Nigeria is attractive as an investment destination, the GDP growth is a disappointment for a county that we expect to be one of the leaders in Africa,” he says (pp. 16-17).
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News > Funds > Markets and Industry News

Ivory Coast launches Eurobond

Africa Global Funds
June 12, 2017, midnight
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Word count: 334

Ivory Coast has issued Eurobonds with two tranches: a dollar-denominated 16-year $1.25bn offering at 6.250%, and an eight-year euro-denominated tranche worth €625m, yielding 5.125%. 

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Ivory Coast has issued Eurobonds with two tranches: a dollar-denominated 16-year $1.25bn offering at 6.250%, and an eight-year euro-denominated tranche worth €625m, yielding 5.125%. 

The Eurobonds were launched on Thursday, June 8.

Demand for the offering was strong, with the West African nation attracting a total of more than $10bn in bids during auction. 

The rationale for including a euro-denominated tranche in the offering is to negate currency risk – euro-denominated debt is protected against exchange rate risk for Ivory Coast, since its currency, the CFA franc, is fixed against the euro. 

Ivory Coast, the world’s largest cocoa producer, is facing increased economic and political pressures as a result of the slump in cocoa prices. Fiscal challenges were further compounded by the Ivory Coast government agreeing to pay bonuses to mutinous soldiers. 

The West African nation is looking to tap into external credit markets to help weather the current storm.

Jason Dolan, Analyst at NKC African Economics, said: “Tapping into external credit markets forms a part of Ivory Coast’s strategy to deal with new budget constraints, as a result of lower cocoa-related fiscal revenues, in addition to increased expenditures.” 

“Demand for Ivory Coast’s Eurobond was robust, with the country benefitting from the current healthy appetite amongst investors for higher-yielding emerging market assets.” 

Taking into account the Eurobond issuance, we foresee the country’s external debt rising to around 34% of GDP in 2017, up from an estimated figure of approximately 32% of GDP last year. Despite increasing, our baseline case – which entails the country limiting its non-concessional borrowing going forward – foresees Ivory Coast’s external debt stock remaining at sustainable levels.”

The Eurobond launch constitutes the country’s first international debt issuance since 2015, and is intended to help in raising funds towards the country’s ongoing infrastructure projects. 

The issuance comes on the back of Ivory Coast’s West African neighbour, Senegal, successfully issuing a 16-year $1.1bn Eurobond last month, which also had a yield of 6.25%.

 

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