Senegal Is Said to Attract Almost $10 Billion in Eurobond Bids

DAKAR (Capital Markets in Africa) – Senegal received more than $10 billion of orders for a $2.2 billion Eurobond on Tuesday as debt from African governments remains in hot demand with yield-hungry investors.

The West African nation sold 1 billion euros ($1.2 billion) of notes with an average life of nine years and a separate $1 billion 29-year tranche, the Finance Ministry said in a statement Wednesday. The euro notes yielded 4.75 percent and the dollar securities 6.75 percent.

Senegal garnered $10.3 billion of bids, according to the government. Initial price guidance for the euro portion was 5.125 percent to 5.25 percent, and 7.125 percent to 7.25 percent for the dollar tranche.

The market’s reaction showed that investors had “great confidence” in President Macky Sall’s policies, including plans to narrow fiscal deficits and keep control of debt levels, the statement read.

No Surprise
The high demand was “no surprise” because Senegal is a “good and improving credit,” said Richard Segal, a senior analyst in London with Manulife Asset Management, a $400 billion money manager.

Yields on Senegal’s $500 million of bonds due in 2024 rose 2 basis points to 5.41 percent by 1:39 p.m. in London. The notes have made a loss of 1.9 percent this year, less than the average loss for emerging-market government debt of 2.3 percent.

The West African nation followed Egypt, Nigeria and Kenya, which have sold $8.5 billion of Eurobonds this year. Senegal’s deal takes the total issuance from African sovereigns in 2018 to $10.7 billion, which is already more than what they sold in all of 2016 and more than half last year’s record $18 billion, according to data compiled by Bloomberg.

Senegal’s government will use as much as $200 million of the proceeds to buy back some of its dollar securities maturing in 2021. BNP Paribas SA, Citigroup Inc., Deutsche Bank AG, Natixis SA, Societe Generale SA and Standard Chartered Plc managed the deal.

Source: Bloomberg Business News