Togo Readies Debut International Bond as Demand for Euros Soars

LOME (Capital Markets in Africa) – Togo is preparing to raise 500 million euros ($564 million) in its first sale of international bonds as demand for emerging-market securities issued in the currency soars, according to people familiar with the matter.

The government has been weighing options to refinance more expensive debt, said the people, who asked not to be identified because the matter is private. While authorities previously thought syndicated loans would be the cheapest option, they are now opting for a Eurobond due to an ongoing rally in assets from developing nations, said the people.

Finance and Economy Ministry spokesman Adji Mandao declined to comment when contacted by phone.

The $5 billion economy, which derives most of its income from agriculture and mining, got its first credit ratings in the past two months. S&P Global Ratings assigned it a B rating, five levels below investment grade and in line with Nigeria and Egypt. Moody’s Investors Service rates it one step lower.

African bonds are in high demand as central banks across the globe tee up for a new round of stimulus. A dovish tilt from the European Central Bank has had an especially strong effect, pushing more and more euro-denominated debt into negative-yielding territory. Germany sold 3.155 billion euros of 10-year bonds at a yield of -0.26% on Wednesday.

Saudi Arabia issued 3 billion euros last week with yields far lower than on its similar-maturity dollar notes.

Togo is in the third year of a $240 million bailout program with the International Monetary Fund. It is seeking to reduce public debt, which the Washington-based lender estimated at 74% of gross domestic product at the end of 2018.

It is a former French colony and a member of the eight-nation CFA franc zone for West Africa. The currency is pegged to the euro.

Neighboring Benin, rated B+ by S&P, sold 500 million of six-year bonds in March. The yield on those has dropped to 5.17% from 6% when they were issued.

Bloomberg Business News