Gabon: What will be the purpose of the next bond issue of 175 billion CFA francs?

Gabon to launch a 175 billion CFA franc bond issue © ARR

Gabon is preparing to issue a new bond. With a maturity of six years (2022-2028), its rate will be 6.25%. Like the previous ones, it should be oversubscribed. This shows the appetite of investors for the « Gabon risk ».

According to our information, 60% of the amount raised will be devoted to the financing of so-called priority projects, i.e. structuring in terms of development (infrastructure, education, health), but also to the repayment of the external debt. Gabon intends to reduce its public debt within 12 to 24 months to around 55% of GDP.

The remaining 40% will be used to pay off the domestic debt (via a system of debt buybacks by banks). The debts concerned are those validated by the task force on domestic debt.

However, this distribution is likely to change « by 10 to 15% », says a source close to the matter.

For bond market specialists, this Gabonese issue should be, like previous ones, oversubscribed. « There is an appetite for Gabon’s risk because, on the one hand, it is one of the most stable economies in the sub-region and, on the other hand, the government has put in place major reforms to clean up public accounts. The risk of default is therefore marginal, if not non-existent, » explains one of them, based in London.

According to the IMF, Gabon is the country with the most « promising » economy in Central Africa.