Gabon Lines Up Eurobond as Concerns Over Coronavirus Mount

GABON (Capital Markets in  Africa): Gabon, one of the lowest-rated sovereigns in Africa, is set to become the first on the continent to tap international markets this year even as concerns over the outbreak of the coronavirus test risk appetite.

The government is marketing 10-year dollar securities with yields of around 7%, according to a person familiar with the transaction who asked not to be identified because they are not authorized to speak about it. Yields on Gabon’s 2025 Eurobonds have climbed nine basis points this week to 5.26%, after falling to a record low last week.

The West African country also announced a tender invitation to holders of its outstanding 2024 and 2025 dollar securities, for cash up to a maximum acceptance amount of $750 million.

Gabon rated seven levels below investment-grade by Moody’s Investors Service at Caa1, mandated Deutsche Bank AG, JPMorgan Chase & Co., and Standard Bank Group Ltd. to manage the sale. It may price today, the person said.

Average yields on Eurobonds from sub-Saharan Africa have dropped more than 150 basis points in the past year to 6.48%, according to JPMorgan Chase & Co. indexes. That’s still almost two percentage points higher than the emerging-market average, promising potentially juicy returns for investors willing to take on the added risk.

Source: Bloomberg Business News