Benin Plans Eurobond Sale as Demand for African Debt Soars

BENIN (Capital Markets in Africa) – Benin is considering to again sell euro-denominated bonds in 2020 as the West African nation seeks to benefit from strong demand for the continent’s high-yielding foreign-currency debt, according to people familiar with the matter.

The $10-billion economy, which sold a debut offshore bond of 500 million euros ($548 million) in March, will probably sell a bigger amount of debt in an issuance that would probably take place in the second quarter, said the people, who asked not to be identified because the matter is private.

The government hasn’t yet made a final decision on a sale or whether it will issue dollar-notes instead, said the people. Benin is rated five notches below investment grade by Fitch Ratings and one step higher by S&P Global Inc.

A spokesman for the government wouldn’t confirm the planning of a bond sale.

Higher Returns
Benin is looking to sell debt at a time when sluggish global economic growth and corresponding central bank rate cuts, as well as concerns about the impact of the coronavirus, are forcing investors to look into the remoter parts of the world’s bond markets to bolster returns. Last week, Ghana received $14 billion in orders for $3 billion in bonds on sale, including a tranche of 40-year securities, which is the longest-dated hard-currency debt yet from a sub-Saharan African issuer.

Gabon, one of the lowest-rated sovereigns in Africa, last month sold $1 billion of 10-year securities with a yield of 6.625%, the lower end of the final price guidance. The yield-to-maturity rate of the 5.75% 2026 paper that Benin sold last year dropped four basis points on Tuesday to 4.97% at 1:40 p.m. in London.

The African Development Bank forecast that Benin’s economy will grow by 6.7% this year, the same as the estimate for 2019.

Source: Bloomberg Business News